User Account

All Pages

Calculate the present value of total outflows

Assignment Help Accounting Basics
Reference no: EM131633233

Q1. B Michaels has a chance to participate in a new public offering by Hi-Tech Micro Computers. His broker informs him that demand for the 700,000 shares to be issued is very strong His broker's firm assigned 25,000 shares in the distribution and will allow Michaels a relatively good customer, 1.3 percent of its 25,000 share allocation.

a. Compute the total dollar profit or loss on Mr. Michaels shares one week, one month and one year after the purchase. In each case, compute the profit or loss against the initial purchase price

b. Also compute this percentage gain or loss from the initial $30 price.

c. Why might a new public issue be expected to have a strong aftermarket?          

Q2. The bowman corporation has a 18 million bond obligation outstanding, which it is considering refunding. Though the bonds were initially issued at the 10 percent, the interest rates on similar issues have declined 8.5 percent. The bonds were originally issued for 20 years and have 10 years remaining. The new issue would be for 10 years. There is a 9 percent call premium on the old issue. The underwriting cost on the new $18,000,000 issue is $530,000 and the issue. The underwriting cost on the new $18,000,000 issue is $530,000, and the underwriting cost on the old issue was $380,000. The company is in a 35 percent tax bracket, and it will use an 8 percent discount rate (rounded after tax cost of debt) to analyze the refunding decision.

a. Calculate the present value of total outflows.

b. Calculate the present value of total inflows.

c. Calculate the net present value

d. Should the old issue be refunded with a new debt?

Reference no: EM131633233

Questions Cloud

What are money market mutual funds : In what assets do these funds typically invest? What factors caused the strong growth in this type of fund from 1992 through 2007?
Generate ideas and options for a possible solution : Generate ideas and options for a possible solution. What specific techniques do you use? How would you implement and evaluate the solution selected?
Time taken for this investment to quadruple : Calculate the time taken for this investment to quadruple in value to $4,000 at an interest rate of 5% per annum compounded annually.
Describe the importance of organizational climate : Describe the importance of organizational climate and motivation
Calculate the present value of total outflows : The bowman corporation has a 18 million bond obligation outstanding, which it is considering refunding. Calculate the present value of total outflows
Which of the given best describes conditional formatting : Which of the following best describes conditional formatting? Using Conditional Formatting to draw attention to cells that are blank _____.
Financial managers in changing economic environment : Challenges faced by Financial Managers in a Changing Economic Environment.
Branches of texas government : The judicial branch(courts) is just as political as the executive(governor) and legislative(legislature)branches of Texas government.
Find the first partial differentiation : Find the first partial differentiation of the below f(x, y) = sin(xvy).(?/3, 4)

Reviews

Write a Review

Accounting Basics Questions & Answers

  What is the appropriate cost of capital

Donner, Inc. will finance a proposed investment by issuing new securities while maintaining its optimal capital structure of 60% debt and 40% equity. What is the appropriate cost of capital to use in analyzing this project

  Determine the average cost per serving

Determine the average cost per serving at each of the following monthly volumes: 100; 1,000; 5,000; and 10,000

  Prepare a statement of fiduciary net position

The following information is available for Russellville at June 30, 2012. Prepare a statement of fiduciary net position for Russellville Pension Trust Fund as of June 30, 2012, by reporting the assets and liabilities from the information provided.

  In the current year alice reports 150000 of salary income

in the current year alice reports 150000 of salary income 20000 of income from activity x and 35000 and 15000 losses

  Calculate the dollars of ticket sales needed to earn

Compute the break-even point in dollars of ticket sales. Calculate the dollars of ticket sales needed to earn a target profit of $6,000.

  At the beginning of 2011 emily corporation issued 29000

at the beginning of 2011 emily corporation issued 29000 shares of 100 par 6 cumulative preferred stock for 110 per

  Deducting payment for the option premium

Determine the amount of dollars to be received, after deducting payment for the option premium.

  A department store using the conventional retail inventory

fuque inc. uses the retail inventory method to estimate ending inventory for its monthly financial statements. the

  Difference between personal and corporate database solution

Can Microsoft Access serve as a corporate database solution, or is it strictly a personal database solution? What might be the difference between a personal and corporate database solution?

  Finney co manufactures a product requiring two pounds of

finney co. manufactures a product requiring two pounds of direct material. during 2011 finney purchases 24000 pounds of

  Paper on a current risk management issue

Prepare a 1,250- to 1,750-word paper on a current risk management issue at your facility.

  The acid-test ratio which uses quick assets in the

the trial balance of maritime company included the following account balances cash 25000 short-term investments 10000

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd