Computing the bond expected rate of return

Assignment Help Finance Basics
Reference no: EM13753702

1. Tea & Coffee Place spent $10,000 to refurbish its current facility. The firm borrowed 60 percent of the refurbishment cost at 8.0% percent interest for 3 years and the loan calls for three equal annual payments. Prepare the amortization schedule for the three year loan. How much total interest is paid in 3 years?

2. RG Builders issued a $1,000 par value bond that pays a 9 percent interest annually. The bond matures in 14 years and is currently selling at $1,120. Your required rate of return is 8.5 percent.

a. Compute the bond's expected rate of return.

b. Determine the value of the bond to you, given your required rate of return.

c. Should you purchase the bond? Why?

Reference no: EM13753702

Questions Cloud

What are the potential problems with market allocation : What are the potential problems with market allocation for noise pollution in class? Are there any better solutions to this problem? Explain.
What can be done to reduce the risk that these threats pose : What can be done to reduce the risk that these threats pose. Discuss your thoughts on if and how the Clark-Wilson security model could be used to help protect data, or would a different security model be more appropriate? If so, which one
Positive and negative aspects of zuckerbergs : Consider both the positive and negative aspects of Zuckerberg's leadership style. What is good, and what is detrimental to Facebook
Discuss how inflation affects borrowers and lenders : Inflation is an important policy issue because it causes a redistribution of income and wealth, and discourages saving and investment. Discuss how inflation affects borrowers and lenders, asset prices, and households on fixed incomes.
Computing the bond expected rate of return : Compute the bond's expected rate of return. Determine the value of the bond to you, given your required rate of return. Should you purchase the bond? Why?
How globalization affects womens lives : How globalization affects women's lives through the distribution of wealth, knowledge and opportunity. Focuses on local and transnational responses to global processes
Four functions of management : Assess how the overall management team performed in terms of the four functions of management, which are as follows:
Explain what risks and challenges does zappos face : What risks and challenges does Zappos face in implementing holacracy, Overall, what do you think the chances are of holacracy succeeding at Zappos
Swot analysis of tesla motors : Conduct a SWOT analysis of Tesla Motors with specific discussion about what you think are the main strengths, weaknesses, opportunities, and threats facing Tesla

Reviews

Write a Review

Finance Basics Questions & Answers

  What is a dividend reinvestment plan drip and how does it

what is a dividend reinvestment plan drip and how does it

  Explain why the funding was overlooked

The Make a Way Foundation has run into a financial crisis. Halfway into their fiscal year, the financier has realized that the company has not put enough money aside to cover all of their costs for the children's summer expense project.

  Required rate of return and stock price for ibm stock

Find out an estimate of the risk-free rate of interest, krf. To obtain this value, go to Bloomberg.com and use the U.S 10 year treasury bond rate as the risk free rate.

  What is your total dollar return on this investment

One year ago, you purchased 400 shares of stock for $12 a share. the stock pays $0.22 a share in dividends each year. today, you sold your shares for $28.30 a share. what is your total dollar return on this investment?

  Administrative and selling expenses

Administrative and selling expenses

  Evaluate two proposed alternatives regarding insulin pump

Evaluate the two proposed alternatives regarding the insulin pump and based upon your evaluation identify which alternative should be selected and support your decision.

  Venture investment analyses

You are an businessman whose business requires $10 million in investment. A venture capital organization undertakes due diligence and offers to provide the funds in exchange for 50 percent ownership of the company.

  What was the annual percentage increase in the winner

In 1902, the first U.S. Open Golf Championship was held. The winner’s prize money was $220. In 2012, the winner’s check was $1,420,000. What was the annual percentage increase in the winner’s check over this period? If the winner’s prize increas..

  Compute the price of the companies stock

A company already paid a $6 dividend per share this year and expects dividens to grow 10% annually for the next four years and 7% annually thereafter. compute the Price of the companies stock (Note; the required rate of return on this stock is 11%..

  What investment has the highest possible expected return

Your investment portfolio consists of $15,000 invested in only one stock—Microsoft. Suppose the risk-free rate is 5%, Microsoft stock has an expected return of 12% and a volatility of 40%, and the market portfolio has an expected return of 10% and a ..

  Multiple foreign operations

Choose a U.S. multinational company. In terms of currency denomination, describe how the firm prices its revenues and costs.

  Relationship between strategic and financial planing

Write a 1,050- to 1,400-word paper in which you describe the relationship between strategic and financial planning. Include the following:

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!

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