Find the market value of the bonds, Corporate Finance

Pfizer Incorporated has 2 million shares of common stock, selling at $18 each. The β of the stock is 1.5, T-bill rate is 6%, and the expected return on the market is 12%. Pfizer also has $20 million (face amount) of bonds, with coupon 6%, which will mature after 8 years. The required rate of return for the bondholders is 10%. Find the market value of the bonds. The income tax rate of Pfizer is 40%. Find the WACC of Pfizer.

Answer: 12.27%

Posted Date: 3/8/2013 5:13:20 AM | Location : United States







Related Discussions:- Find the market value of the bonds, Assignment Help, Ask Question on Find the market value of the bonds, Get Answer, Expert's Help, Find the market value of the bonds Discussions

Write discussion on Find the market value of the bonds
Your posts are moderated
Related Questions
Explain in detail, using the time value of money,if its better to receive a 685k tax deduction in 1 year vs 17,564.10 each year for 39 years.(inflation, opportunity cost, etc...) T

Bond J is a 4 percent coupon bond. Bond K is a 12 percent coupon bond. Both bonds have 8 years to maturity, make semiannual payments and have a YTM of 7 percent....what are the mon

Dear Sir/Madam, I have an assignment for my financial engineering class, which contains 19 different questions, and is due Monday 11 a.m. Can you please tell me if you have someon

The case company combines SKUs into product groups and product groups into assortment groups. The methods based on advance demand information (Methods 1-3) can therefore be on a pr

how to calculate duration of a portfolio by using the average maturity, average coupon rate and average yield of maturity?

Flower stands whose beneficial life spans a period of eight years was purchased on 1 August  2011 for $12,000.   It can be sold as scrap for $2,000.  The business has a financial y

A? The effect of incorrect recognition of revenue on financial reportssk question #Minimum 100 words accepted#

the variance of stock a is .004,the variance of market is .007,co variance between two is .0026 calculate correlation coefficient

Think of any business you would like to open in Lebanon (from small to big project) and prepare a preliminary income statement from five to eight years maximim. Compute the expecte

Question 1: Participants in a recent radio discussion on the WTO were full of ideas. The WTO could do this, the WTO should do that, they said. One of them finally interjected: