Face value zero-coupon bonds

Assignment Help Financial Management
Reference no: EM131010949

The MerryWeather Firm wants to raise $29 million to expand its business. To accomplish this, the firm plans to sell 15-year, $1,000 face value zero-coupon bonds. The bonds will be priced to yield 7 percent. What is the minimum number of bonds the firm must sell to raise the $29 million it needs? Use annual compounding.

Reference no: EM131010949

Questions Cloud

Describe the unique oceanographic characteristics : For this assignment, you will choose an interesting place on Earth and describe the unique oceanographic characteristics of that location
What is the trend in the global oil prices : What is the trend in the Global Oil prices? What is the impact of increasing the global oil prices on Qatar Economy?
What is its expected dividend payout ratio : Flavortech expects EBIT of $2,000,000 for the current year. The firm's capital structure consists of 40% debt and 60% equity and its marginal tax rate is 40%. The cost of equity is 14% and the company pays a 10% rate on its $5,000,000 of long term de..
What is its economic value added : Spencer Inc has the following information for the current year: Net income=$600; Net operating profit after taxes (NOPAT) = $600; Total assests = $4,000; short term investments = $500; stockholders equity =$2000; debt=$1000; and total net operating c..
Face value zero-coupon bonds : The MerryWeather Firm wants to raise $29 million to expand its business. To accomplish this, the firm plans to sell 15-year, $1,000 face value zero-coupon bonds. The bonds will be priced to yield 7 percent. What is the minimum number of bonds the fir..
What is the default risk premium : 10-year T Bonds have a yield of 5.3% and 10 year corporate bonds yield 6.75%. Also, corporate bonds have a .25% liquidity premium versus a zero liquidity premium for T-bonds, and the maturity risk premium on both Treasure and corporate 10 year bonds ..
Is the article scientifically accurate : Intellectual Impact of the Article: How well does the article function as a piece of writing (i.e. quality of language, exposition, description, voice)? Is the article scientifically accurate
What is the free cash flow for the current year : Bates Motors has the following information for the previous year: net income = $200; net operating profit after taxes (NOPAT) = $300; Total assets = $1,000 and total net operating capital = $800. The information for the current year is: net income =$..
Target capital structure-marginal cost of equity capital : allison Engines Corporation has established a target capital structure of 40 % debt and 60% common equity. The firm expects to earn $600 in after tax income during the coming year and it will retain 40% of those earnings. the current market price of ..

Reviews

Write a Review

Financial Management Questions & Answers

  Bond is treated as an original issue discount bond

A newly issued 10-year maturity, 6% coupon bond making annual coupon payments is sold to the public at a price of $955. What will be an investor’s taxable income from the bond over the coming year? The bond will not be sold at the end of the year.

  Default risk of various municipal and corporate bonds

Agencies such as Moody’s, Fitch, and Standard and Poor’s rate the default risk of various municipal and corporate bonds. While their rating systems are proprietary, it is widely known that they rely on financial ratios as key inputs to their bond rat..

  What is the volatility of the risk-free security

Suppose that the return on a risk-free security is 5 percent. The expected return on the market portfolio is 16 percent and the volatility of the market portfolio is 22 percent What is the volatility of the risk-free security? What is the correlation..

  What is the exact real rate

Treasury bills are currently paying 5 percent and the inflation rate is 3.2 percent. What is the approximate real rate of interest? What is the exact real rate?

  What is break-even level of earnings before interest-taxes

Chick 'N Fish is considering two different capital structures. The first option consists of 25,000 shares of stock. The second option consists of 15,000 shares of stock plus $150,000 of debt at an interest rate of 7.5 percent. Ignore taxes. What is t..

  How does credit expansion help economic growth

How does credit expansion help economic growth? Please elaborate. Why is confidence in the banking system of the utmost importance for the smooth functioning of the economy?

  What is the breakeven point in dollar sales

The Poseidon Swim Company Produces swim trunks. The average selling price for one of their is $32.97. The variable cost per unit is $23.68, has an average fixed cost per year of $31,292. What is the breakeven point in dollar sales?

  The foregoing transactions using accounting equation

Here is a list of transactions for a newly-formed corporation that provides professional tax services: Organized the business as a professional corporation, investing $28,000 cash in the business and issuing 1,000 shares of no-par common stock. Recei..

  Tax on dividend income alone generally amounts

A corporation receives 35,000 in dividend income If it is in the 34% marginal bracket, the tax on the dividend income alone generally amounts to

  What is the accrued interest on the bond

Consider a bond with a settlement date of 12/12/1990. The bond has a face value of $100. The maturity of the bond is March 15, 2014. The coupon rate is 5.5%. If the yield to maturity of the bond is 5.34% (bond equivalent yield, semi annual compoundin..

  Constant growth rate and g

A stock is trading at $80 per share. The stock is expected to have a year-end dividend of $3 per share (D1 = $3), and it is expected to grow at some constant rate g throughout time. The stock's required rate of return is 10% (assume the market is in ..

  Offered an investment plan

You have $7,863 you want to invest for the next 34 years. You are offered an investment plan that will pay you 11.8 percent per year for the next 9 years and 19.2 percent per year for the remaining years. How much will you have at the end of the 34 y..

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