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Nikki G's Corporation's 10-year bonds are currently yielding a return of 6.50 percent. The expected inflation premium is 1.20 percent annually and the real interest rate is expected to be 3.00 percent annually over the next ten years. The liquidity risk premium on Nikki G's bonds is 0.35 percent. The maturity risk premium is 0.15 percent on 3-year securities and increases by 0.06 percent for each additional year to maturity. Calculate the default risk premium on Nikki G's 10-year bonds. (Round your answer to 2 decimal places.)
If dividends are expected to decline at 8 percent per year, what is a share of the stock worth today?
Suppose you have $2,000 and plan to purchase a 3-year certificate of deposit (CD) that pays 4% interest, compounded annually. How much will you have when the CD matures?
Compute the NPV and IRR for the above two projects, assuming a 14% requited rate of return.
This bond is currently selling for 92 percent of its face value. What is the company's pre-tax cost of debt?
Calculate the equivalent annual costs for selling the new machine and for selling the old machine. Assume inflation is 0%.
Bet'R Bilt Bikes just announced that its yearly dividend for this coming year will be $2.42 a share and that all future dividends are expected to increase by 2.5% yearly.
What coupon rate should be set on the bonds-with-warrants so that the package would sell for $1,000?
What is the yield to maturity on a 10 year,9% annual coupon, $1,000 par value bond sells at $887? That sells at $1,134.20? What does the fact that a bond sells at discount or at a premium tell you about the relationship between rd and the bonds co..
Construct two financing plans-one conservative, with 80% of assets financed by long-term sources, and the other aggressive, with only 60% of assets financed by long-term sources.
The corporate tax rate is 30%, and the target (or optimal) capital structure is 25% debt, 10% preferred stock, and 65% common stock. What is MacLeod's weighted average cost of captial.
Suppose a firm makes purchases of $3.6 million per year under terms of 2/10, net 30, and takes discounts.
Which of the following is an advantage of floating rate bonds to investors?
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