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Fix-It Inc. recently issued 10-year, $1000 par value bonds at an 11% coupon rate. Assume bond coupons are paid semiannually.
A. Two years later, similar bonds are yielding investors 6%. At what price are Fix-Its bonds selling? Round the answer to the nearest cent. $
B. What would the bonds be selling for if yields had risen to 12%? Round the answer to the nearest cent. $
C. Assume the conditions in part a. Further assume interest rates remain at 6% for the next 8 years. Find the price of the Fix-It bonds at the end of year 10. Round the answer to the nearest cent.
The Outlet needs to raise $3.2 million for an expansion project. The firm wants to raise this money by selling zero coupon bonds with a par value of $1,000 that mature in 20 years. The market yield on similar bonds is 7.8%. How many bonds must the Ou..
At year’s end your company has cash of $10,500, receivables of $49,900, inventory of $40,200, and prepaid expenses totaling $5,900, Liabilities of $56,500 must be paid next year. A year ago receivables stood at $68,100, and sales for the current year..
The intrinsic value of a stock provides a purchase price for a stock...
At the beginning of the year, a firm has current assets of $327 and current liabilities of $231. At the end of the year, the current assets are $491 and the current liabilities are $271. What is the change in net working capital?
HFX Ltd. has the opportunity to undertake the following project: The project requires an immediate $1,000,000 investment in equipment that will be added to an ongoing asset pool with a 20% CCA rate. The market value of the equipment then is expected ..
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Gilmore, Inc., just paid a dividend of $2.70 per share on its stock. The dividends are expected to grow at a constant rate of 4.5 percent per year, indefinitely. Assume investors require a return of 9 percent on this stock. What is the current price?..
You have been asked to determine a rate on a bond. It has a maturity of 10 years, a coupon of 6.00%, and a par value of 1000. You are given the following information. What is the yield on the bond? What is the nominal rate of the ten-year treasury?
The following are the net cash flows for a project under consideration: F0 = -600 F1 = 3200 F2 = -2000 F3 = -6400 F4 = 6400. Plot PW (i) starting at an interest rate of 0% and ending at 350%. Find all non-negative rates of return for this project
If the firm uses straight-line depreciation to an assumed salvage value of zeroover a 6-year life, what are the cash flows of the project in years 0 to 6?
Consider two assets, A and B. The correlation of returns between asset A and B is zero. Starting with the formula for the variance of a portfolio composed of the two assets, derive an expression for the weight placed in asset A and the weight placed ..
Felice bought a duplex apartment at a cost of $180,000. Her mortgage payments on the property are $1,400 per month. Her real estate taxes total $2,196 per year, and insurance costs $936 per year. What monthly rent must she charge for each apartment t..
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