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Bond prices and yields
Assume that the Financial Management? Corporation's $1,000?-par-value bond has a 7.900% ?coupon, matures on May? 15, 2023, has a current price quote of 93.044 and a yield to maturity? (YTM) of 8.924%. Given this? information, answer the following? questions:
a. What is the dollar price of the? bond?
b. What is the ?bond's current yield??
c. Is the bond selling at? par, at a? discount, or at a?premium? ? Why?
d. Compare the? bond's current yield calculated in part b to its YTM and explain why they differ.
A project has an initial cost of $70,925, expected net cash inflows of $11,000 per year for 11 years, and a cost of capital of 8%. What is the project's NPV? (Hint: Begin by constructing a time line.) Do not round your intermediate calculations.
The company has recently completed a corporate wide initiative in six sigma/lean manufacturing.
If you earn 10% per year on your investments, but pay 35% in taxes on all of your investment returns, then what is your annual after-tax return?
Calculate the price per share if its equity cost of capital is 10% per year assuming that dividends are paid at the end of the year.
Weak form efficiency is best defined as a market where current prices are based on:
Describe key differences in the balance sheets and income statements of each of the following firms versus one of the banks introduced. a. Goldman Sachs Bank versus PNC Bank b. MO Bank versus Community Bank c. BMW Bank versus Community Bank
The Duckett Group is trying to determine its optimal average cash balance. The firm has determined that it will need $5,000,000 net new cash during the coming year. According to the Baumol model, what is the optimal transaction size for transfers fro..
Calculate the beta and standard deviation of Stock I. Calculate the beta and standard deviation of Stock II.
Atlas Mines has adopted a policy of increasing the annual dividend on its common stock at a constant rate of 2.75 percent annually. The firm just paid an annual dividend of $1.67. What will the dividend be six years from now?
Stock R has a beta of 1.9, Stock S has a beta of 0.35, the expected rate of return on an average stock is 9%, and the risk-free rate is 5%. By how much does the required return on the riskier stock exceed the required return on the riskier stock exce..
Ward corp. is expected to have an EBIT of $2,400,000 next year. Depreciation, the increase in net working capital, and capital spending are expected to be $175,000, $105,000, and $125,000, respectively. All are expected to grow at 18 percent per year..
A company is considering a 5-year project to open a new product line. A new machine with an installed cost of $110,000 would be required to manufacture their new product, which is estimated to produce sales of $60,000 in new revenues each year. If st..
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