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Assume the following information for an existing bond that provides annual coupon payments: Par value = $1,000 Coupon rate = 11% Maturity = 4 years Required rate of return by investors = 11% a. What is the present value of the bond? b. If the required rate of return by investors were 14 percent instead of 11 percent, what would be the present value of the bond? c. If the required rate of return by investors were 9 percent, what would be the present value of the bond?
Clumsy Corp. is planning to issue new 30-year bonds. Initially, the plan was to make the bonds non-callable. If the bonds were made callable after 10 years at a 10% call premium, how would this affect their required rate of return?
The standard deviation of asset x is 10%. The standard deviation of asset Y is 32%. the correlation between the returns of X and Y is 32%. If you have a portfolio invested equally in X and Y, the portfolio standard deviation is? Please show me how to..
Pacific Fixtures lists the following accounts as part of its balance sheet. Compute the return on stockholders’ equity if the company has sales of $20 million and the following net profit margin:
Compute the yield to maturity on a bond that makes coupon payments of $95.00 yearly, currently sales for $990 and will mature in 11 years. HINT: The coupon payment is usually given as a percent and you turn it into a dollar amount and enter it into y..
Nico bought 500 shares of a stock for $24.00 per share on January 1, 2013. He received a dividend of $2.50 per share at the end of 2013 and $4.00 per share at the end of 2014. At the end of 2015, Nico collected a dividend of $3.00 per share and sold ..
Compute the future value of $5,000 deposited annually for 5 years, assuming a 10% annual interest rate compounded once a year. You may want to use the Excel function for computing the future value of an annuity or an FV table of factors. Explain the ..
Your sister is considering to add one additional stock to a three stock portfolio, to form a four stock portfolio. The three stocks currently held all have b=1.0, and they are perfectly positively correlated with the market. However, stock A's standa..
ET Industries has net working capital of $12,700, current assets of $38,200, equity of $53,400, and long-term debt of $11,600. What is the amount of the net fixed assets?
Naperville Corporation plans to buy a piece of construction equipment for $225,000 and depreciate it fully over 5 years using straight-line method of depreciation. However, it plans to use it for 8 years and then sell it for an unknown amount. The eq..
Determine the value of a $1,000 Canadian Pacific Limited perpetual 4 percent debenture (bond) at the following required rates of return:
A firm’s dividends have grown over the last several years. 10 years ago the firm paid a dividend of $2. Yesterday it paid a dividend of $7. What was the average annual growth rate of dividends for this firm? Round answer to two decimal places.
The Thomas Co. is analyzing a proposed expansion project. Currently, the company owns 15 acres of land, which it purchased for $6 million 5 years ago. The land is currently valued at $7.2 million and is totally debt-free. Should the Thomas Co. pursue..
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