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1. A loan of nominal amount $100,000 is to be issued bearing coupons payable quarterly in arrear at a rate of 5% per annum. Capital is to be redeemed at 103 on a single coupon date between 15 and 20 years after the date of issue, inclusive. The date of redemption is at the option of the borrower. An investor who is liable to income tax at 20% and capital gains tax of 25% wishes to purchase the entire loan at the date of issue.Calculate the price which the investor should pay to ensure a net e ective yield of at least 4% per annum.2. An investor purchased a bond with exactly 15 years to redemption. The bond, redeemable at par, has a gross redemption yield of 5% per annum eff ective. It pays coupons of 4% per annum, half yearly in arrear. Assume that the investor pays 25% income tax on coupons only.(a) Calculate the price paid for the bond.(b) After exactly eight years, immediately after the payment of the coupon then due, this investor sells the bond to another investor who pays income tax at a rate of 25% and capital gains tax at a rate of 40%. The bond is purchased by the second investor to provide a net return of 6% per annum e ffective.i. Calculate the price paid by the second investor.ii. Calculate, to one decimal place, the annual e ffective net rate of return earned by the first investor during the period for which the bond was held.
What if interest rates on the 10 percent loan go up to 15 % in the second year and 18% in the third year? What would be the total interest cost compared to the 12%, three year loan?
The following are balance sheets for Scott Corporation as of the end of the Years 1 and 2, Calculate the amount of cash provided by Scott's operating activities.
Below are details of a semiannual bond. Please show work in Excel spreadsheet. Par value = 1000; Maturity 4 years; Market rate if interest (yield to Maturity) = 11% per annum; Coupon rate = 8% per year paid semiannually.
Determine which of the following are temporary differences that are normally classified as expenses or losses that are deductible after they are recognized in financial income?
Its common equity trades at 53$ per share, and the firm has 6.4 million shares outstanding. What weights should MV Corporation use in its WACC?
Segmentation of consumer markets can lead to questionable practices, specifically in targeting what some may define as "vulnerable" market segments. For example, very young children are considered by some to be "vulnerable".
Beckman Engineering and Associates has 25 million shares outstanding. Shares are trading at $8. Beckman Engineering and Associates management plans to raise $60 million to by issuing debt to repurchase shares.
Discuss the biggest ethical concern(s) you have with investing your own money or offering advice to other people investing theirs, and the possible impact these ethical concerns may have on the market overall.
With this feature dropped, the company believes it can sell 2,500 units at $4000 per unit. Will the company be able to produce the item at the new taret cost, or less?
Computation of IRR and NPV where The Renn project cost $200,000 and its expected net cash inflows are $47,500 per year for 6 years and then $50,000 for 6 years.
High-Top, Inc. is considering a four-year project that has an initial after-tax outlay cost of $120,000. The future cash inflows from its project are $25,000, $30,000, $35,000 and $32,000 for years 1, 2, 3 and 4,
Identify five qualitative financial and economic assessments specific to Gant and its industry that you shouldconsider in further analyzing Gant's liquidity.
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