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Analyzing bond price changes [LO3] Katie Pairy Fruits Inc. has a $1,900, 20-year bond outstanding with a nominal yield of 16 percent (coupon equals 16% x $1,900 = $304 per year). Assume that the current market-required interest rate on similar bonds is now only 12 percent. Use Appendix B and Appendix D for an approximate answer but calculate your final answer using the formula and financial calculator methods.
a. Compute the current price of the bond. (Do not round intermediate calculations. Round your final answer to 2 decimal places. Assume interest payments are annual.) Current price of the bond $
b. Find the present value of 4 percent x $1,900 (or $76) for 20 years at 12 percent. The $76 is assumed to be an annual payment. Add this value to $1,900. (Do not round intermediate calculations. Round your final answer to 2 decimal places. Assume interest payments are annual.) Present value $
Dynamics Telecommunications Corp. has made an investment in another company that will guarantee it a cash flow of $26,987 each year for the next five years. If the company uses a discount rate of 17 percent on its investments, what is the present ..
If you want to inest in a stock that pays $3.50 annual cash dividens for the next six yrs. At the end of the six years, you will sell the stock for $22.50. If you want to earn 12.5% on this investment, what is a fair price for this stock if you bu..
The Griffey Lang Food Corporation faces a difficult problem. In management's effort to grow the business, they accrued a debt of $150 million while the value of the company is only $125 million.
The firm's total fixed cost are $80,000, there are no beginning or ending inventories, Determine the per unit contribution for each of the two models.
The Thompson Company projects an increase in sales from $18 million to $25 million, but it needs an additional $500,000 of current assets to support this expansion.
Beckman, Inc., purchases 60 percent of the outstanding stock of Calvin for $36,000. Calvin Corporation has one recorded asset, a specialized production machine with a book value of $10,000.
Determine the present value of your trust fund if it promises to pay you $50,000 on your 40th birthday seven years from today and earns 10 percent compounded annually
Describe some of the short-term investment vehicles that you use to manage your cash resources. Why did you elect these vehicles over the alternatives? What are their primary advantages and disadvantages?
Find the market return for an asset with a required return of 16% and a beta of 1.10 when the risk-free rate is 9% and find the beta for an asset with a required return of 15 percent.
Describe and discuss the concept of ethics, please give an example.
Executive Chalk is financed solely through common stock and has outstnading 25 million shares with a market price of $10 a share. It now announces that it intends to issue $160 million of debt & to use proceeds to buy back common stock.
Suppose you have been hired to run a pension fund for TelDet Corporation, a small manufacturing firm. The firm currently has $5 million in the fund and expects to have cash inflows of $2 million a year for 1st 5-years followed by cash outflows of $3 ..
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