Considering issuing bonds

Assignment Help Financial Management

Reference no: EM131073214

Pybus, Inc. is considering issuing bonds that will mature in 23 years with an annual coupon rate of 9 percent. Their par value will be $1,000, and the interest will be paid semiannually. Pybus is hoping to get a AA rating on its bonds and, if it does, the yield to maturity on similar AA bonds is 12 percent. However, Pybus is not sure whether the new bonds will receive a AA rating. If they receive an A rating, the yield to maturity on similar A bonds is 13 percent. What will be the price of these bonds if they receive either an A or a AA rating? The price of the Pybus bonds if they receive a AA rating will be $ squarebox. (Round to the nearest cent.)

Reference no: EM131073214

Questions Cloud

Context of theoretical explanations of market bubbles : Bubbles are nothing more than irrational exuberance in action”. Critically evaluate this statement in the context of theoretical explanations of market bubbles.

Determine the estimated after-tax cash ?ow : Tampa Electric Company (TECO) is planning a major upgrade in its computerized demand management system. In order to accommodate this upgrade, a building will be constructed on land already owned by the company. The building is estimated to cost $1.8M..

What is the present value of the cash flows : The state lottery's million-dollar payout provides for $1.3 million to be paid in 20 installments of $65,000 per payment. The first $65,000 payment is made immediately, and the 19 remaining $65,000 payments occur at the end of each of the next 19 yea..

How much must you deposit each year to obtain your goal : To pay for your child's education, you wish to have accumulated $19,000 at the end of 13 years. To do this, you plan to deposit an equal amount into the bank at the end of each year. If the bank is willing to pay 7 percent compounded annually, how mu..

Considering issuing bonds : Pybus, Inc. is considering issuing bonds that will mature in 23 years with an annual coupon rate of 9 percent. Their par value will be $1,000, and the interest will be paid semiannually. Pybus is hoping to get a AA rating on its bonds and, if it does..

Cash outlay required to replace the existing fleet : The Queensland Land and Cattle Company (QL&CC) is one of the largest cattle-buyers in the country. It has buyers at all the major cattle auctions throughout eastern Australia who buy on the company's behalf and then have cattle shipped to Longreach, ..

Lockbox system to reduce the firm collection times : It takes Cookie Cutter Modular Homes, Inc., about six days to receive and deposit checks from customers. Cookie Cutter’s management is considering a lockbox system to reduce the firm’s collection times. What is the reduction in outstanding cash balan..

Compute the bonds yield to maturity : The 14-year, $1,000 par value bonds of Waco Industries pay 12 percent interest annually. The market price of the bond is $1,115, and the market's required yield to maturity on a comparable-risk bond is 9 percent. Compute the bond's yield to maturity.

Calculate the present value of the annuity streams : A stock you are evaluating just paid an annual dividend of $3.00. Dividends have grown at a constant rate of 1.3 percent over the last 15 years and you expect this to continue. If the required rate of return on the stock is 16.1 percent, what should ..

User Account

All Pages