Coupon rate and pays interest annually

Assignment Help Financial Management

Reference no: EM13763825

Morning Star Inc. sold an issue of 30-year, $1,000 par value bonds to the public. The bonds has a 14.6% coupon rate and pays interest annually. It is now 7 years later. The current market rate of interest of the Morning Star INc. bonds is 11.7%. What is the current market price (intrinsic value) of the bonds? Round the answer to two decimal places

Reference no: EM13763825

Questions Cloud

How does an ipo differ from a seasoned equity offering : How does an IPO differ from a Seasoned Equity Offering? When the underwriters are acting under a firm commitment, what services do they provide for the private company attempting their IPO? How are the underwriters compensated for such services?

Explain the various activities undertaken by the managers : Explain the various activities undertaken by the managers which may result in agency costs to the company. Describe how a listed company may attempt to reduce the agency costs incurred as a result of the management activities described in question 1.

Similarities between warrants and convertible bonds : Explain differences and similarities between Warrants and Convertible Bonds. Explain differences and similarities between callable bonds and convertible bonds. Explain differences and similarities between primary, secondary and over-the-counter marke..

Callable bond-what is the yield to call for bonds : Alex plans to purchase a callable bond of Horizon Inc. The bond is 20-year to maturity, carry 13.5% annual coupon, paid semi-annually, and have a$1,000 par value. The bond is selling now for $1,287 each. The bond can be called back in 7 years at a ca..

Coupon rate and pays interest annually : Morning Star Inc. sold an issue of 30-year, $1,000 par value bonds to the public. The bonds has a 14.6% coupon rate and pays interest annually. It is now 7 years later. The current market rate of interest of the Morning Star INc. bonds is 11.7%. What..

Initial fixed asset investment : Consider a three-year project with the following information: initial fixed asset investment = $870,000; straight-line depreciation to zero over the five-year life; zero salvage value; price = $34.05; variable costs = $22.55; fixed costs = $210,000; ..

Considering a new three-year expansion project : Cochrane, Inc., is considering a new three-year expansion project that requires an initial fixed asset investment of $2.31 million. The fixed asset will be depreciated straight-line to zero over its three-year tax life, after which time it will be wo..

Referring to the manipulation of the numbers : Referring to the manipulation of the numbers, from our discussion last week, most of us can conclude that "risk is risk" and that while yes, there are certain forms of risk (unsystematic) that can be diversified, generally it still exists and cannot ..

Subsequently viability of future projects and investments : First, to focus more on the relationship between debt and the cost of capital, can you or anyone else provide an example in which changes in leverage would not affect the cost of capital, and subsequently the viability of future projects and investme..

User Account

All Pages