User Account

All Pages

Find the effective rate on the loan

Assignment Help Corporate Finance
Reference no: EM13195224

1. During the course of your education, you have borrowed $65,000 in student loans. You plan to make monthly payments in order to repay the debt. The interest rate is fixed at 6.8% APR (compounding is monthly).

a. If the loan is for 10 years, find the monthly payment.

b. Right after your 38th payment, you get a huge bonus and decide to pay off the loan. How much do you still owe?

c. Find the effective rate on the loan.

2. Starbucks has one debt issue outstanding. The debt matures on August 15, 2017, and has a 6.25% coupon. Coupons are paid semiannually. The bond is priced to yield 1.61% compound semiannually. The bond has a face value of $1000. SHOW YOUR WORK

a. Estimate the price of the bond on February 15, 2013, immediately after that coupon is paid.

b. You buy the bond on February 15, 2013 for your estimated price from part a. You sell the bond 1 year later for $1160. What was your return? Why is it different from the original yield to maturity? Assume you collect 2 coupon payments.

3. You have the following information for Starbucks: Current EPS is $1.79. The current dividend is $.68 per share. The return on equity is 24%. The current price is $49.22. Hint: Get the payout rate.

a. Use the dividend discount model (also known as the constant growth model) to estimate the return for Starbucks.

b. Assuming your answer to part a. is correct, estimate the present value of the growth opportunities (PVGO).

Reference no: EM13195224

Questions Cloud

What are the page numbers : At one place in a text book, the procuct of the page numbers on facing pages is 930. What are the page numbers?
Calculate free cash flows and find internal rate of return : Calculate the free cash flows for time 0 through time 5 and calculate the net present value (NPV) for a 12% cost of capital and find the internal rate of return (IRR).
What is the return on the preferred stock : what is the return on the preferred stock? HINT: This is just like a bond, but the face value is 25. For the problem, you can assume the dividends are annual.
State amounts of reactant completely react to form products : For the reaction shown, calculate how many grams of each product form when the following amounts of reactant completely react to form products. Assume that there is more than enough of the other reactant.
Find the effective rate on the loan : Right after your 38th payment, you get a huge bonus and decide to pay off the loan. How much do you still owe and find the effective rate on the loan.
State how many grams of khp are needed to neutralize : How many grams of KHP are needed to neutralize 54.63 mL of a 0.1051 M NaOH solution?
Find the probability that everyone gets back his or her own : You and six friends play a game where each person writes down his or her name on a scrap of paper, and the names are randomly distributed back to each person. Find the probability that everyone gets back his or her own name.
Compute the ph of the resulting solution : the titration of 40.0ml of 0.200M HONH2 (Kb=1.1 x 10-3) by 0.100 M HNO2. Calculate the pH of the resulting solution after the following volumes of HNO3 have been added
How much should they be willing to pay for this policy : for the woman. They decide to take out a life insurance policy that will pay $10,000 if either one dies during the next 5 years and $15,000 if both die during that time. How much should they be willing to pay for this policy? (Assume that their li..

Reviews

Write a Review

Corporate Finance Questions & Answers

  Find after tax cost of debt and cost of equity

Chatham Craft's capital structure consists of 30 million dollar of debt and 90 million dollar of equity. The Corporations's CFO has provided the following information: interest rate on debt is 8 percent.

  Find the effective annual rate

Bank A provides loans with a 10 percent stated yearly rate and a 10 percent compensating balance. You wish to obtain $250,000 in a 6 month loan.

  Find the real gdp percent

Assume nominal GDP in 1999 was 100 billion dollar & in 2001 it was 270 billion dollar. The general price index in 1999 was 100 & in 2001, it was 150.

  Banker must be satisfied

Before approving a loan to a small business, banker must be satisfied with the owner's character. Why is this? Do you agree or disagree?  Explain your answer.

  Determine the turnover, margin, and return on investment

Determine the turnover, margin, and return on investment (ROI) in 2005 for each of FedEx's four business segments.

  Calculate the apr of investment

You purchased a stock 3 months ago for $32.81 per share. The stock paid no dividends. The current share value is $37.53. Calculate the APR of your investment?

  Construct profitt diagrams or profit tables

An investor wants upside potential if IBM increases but wants (net) losses no greater than $15 if prices decline and an investor wants to capture prots if IBM declines in price but wants a guaranteed limited loss if prices increase.

  Would it be acceptable for a company to account

On July 1, Pine Region Dairy leased equipment from Farm America for a period of three years. The lease calls for monthly payments of $2,500 payable in advance on the first day of each month, beginning July 1.

  Obtaining the cash funds

There is a common phrase in business: cash is king. Cash flow is the life-blood of a company. Without it, a corporation will fail". Yet, firms often have to take risks that could potentially jeopardize their cash flow.

  Evaluation of current price of the stock

Evaluation of current price of the stock - What is the current value of a share of Bollinger's stock to an investor who requires a 15 per cent required rate of return.

  Calculate the expected return for the stock

A stock has a beta of 1.2 and the standard deviation of its returns is 25%. The market risk premium is five percent and the risk-free rate is four percent.

  Build a balanced scorecard for the unit

Develop three specific objectives within each of the four perspectives for the unit. Each objective should have at least one quantified target metric associated with it.

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!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

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