Firm have to issue to receive the needed funds

Assignment Help Financial Management
Reference no: EM131014357

Sincery Station Corp needs to raise $ 527000 to improve its manufacturing plant. It has decided to issue 1000 par value bond with an annual coupon rate of 11.1 percent with interest paid semi-annually and a 15 yrs maturity. Investors require a rate of return of 8.9%.

A) Compute the market value of the bonds

B) How many bonds will the firm have to issue to receive the needed funds?

What is the firm after tax- cost f debt if the firm tax rate is 34%?

Reference no: EM131014357

Questions Cloud

Research correlation between infant and preschool measures : For this Discussion, use the Walden Library to research the correlation between infant and preschool measures of cognitive ability to adult measures of intelligence. Synthesize the research to support your position
What should an annual interest rate : Your uncle, Jerry, has just won a lottery prize. He has been given two options: (1) a lump sum payment of $350,000 now, or (2) $3,000 at the end of each month for the next 15 years. Assume your uncle is able to receive a 5.00 percent annual return co..
Coupon-paying bonds make annual coupon payments : Four years ago, Lisa Stills bought six-year, 9.76 percent coupon bonds issued by the Fairways Corp. for $947.68. If she sells these bonds at the current price of $914.97, what will be her realized yield on the bonds? Assume similar coupon-paying bond..
What is the acquisition premium for target shareholders : An acquirer’s standalone share price is $12 and its number of shares outstanding is 1,000,000. The target firm has 100,000 shares outstanding, and its standalone share price is $10. The synergy gain from merging the two firms is $500,000. If the acqu..
Firm have to issue to receive the needed funds : Sincery Station Corp needs to raise $ 527000 to improve its manufacturing plant. It has decided to issue 1000 par value bond with an annual coupon rate of 11.1 percent with interest paid semi-annually and a 15 yrs maturity. Investors require a rate o..
What critiques do you have about the article : What critiques do you have about the article? Were there any problems with the design of the studies? What do you think they could have done better? Did the researchers address them
What angle should be used to have the clown land directly : Can the performer be fired to the cushion without hitting the ceding? Will the clown land on the cushion? If not, will he land short or long of the mark? What angle should be used to have the clown land directly on the cushion?
Statement of financial position : There are many users of accounting information, such as business owners, stockholders, customers, lenders, and suppliers. Among the financial statements is the statement of financial position. Answer the following questions about the statement of fin..
Explain the hypothesis tested by this statistic : Interpret the regression coef?cient. Are subjects in the U.S. more willing to pay extra for non-biotech breakfast cereals than U.K. subjects, or are they less willing?

Reviews

Write a Review

Financial Management Questions & Answers

  Indifferent between investing in corporate bond

Assume that Jose is indifferent between investing in a corporate bond that pays 10% interest and a stock with no growth potential that pays an 8% dividend yield. Assume that the tax rate on dividends is 15%. What is Jose's marginal tax rate?

  When social marginal benefit curve of reduction of pollution

When the social marginal benefit curve of reduction of pollution is locally flat, which of the following generally makes sense in the presence of uncertainty about costs of reduction? Which of the following are questions answered by public finance? W..

  Calculate the present value of estimate of cash flows

Calculate the present value of this estimate of cash flows (operating costs in nominal$) if the nominal MARR is 10%. PV= Please show your work. I calculated Real MARR as 5.77% but have no idea what to do next.

  Proposed positive net present value project

To best understand a proposed positive net present value project, managers should:

  The expected return on the portfolio

You own a portfolio that is 33 percent invested in Stock X, 48 percent in Stock Y, and 19 percent in Stock Z. The expected returns on these three stocks are 9 percent, 12 percent, and 14 percent, respectively. What is the expected return on the portf..

  What are the firms interest tax savings

Dharma Supply has earnings before interest and taxes (EBIT) of $568,000, interest expenses of $299,000 and faces a corporate tax rate of 34 percent. a. What is Dharma Supply's Net Income? b. What would Dharmas net income be if it didn’t have any debt..

  The undergrounds has annual sales

The Underground's has annual sales of $1.46 million. The cost of goods sold is equal to 80 percent of sales. The firm has an average accounts receivable balance of $150,000 and an average accounts payable balance of $163,500. How many days on average..

  Be sure to use geometric average in your calculations

Assume that you had a 1-year T-bond that yields 1.8% and a 2-year T-bond that yields 2.55%. From this information you could determine what the yield on a 1-year T-bond one year from now would be. If the pure expectations theory is correct, what is th..

  Analyze the performance of timco

Analyze the performance of Timco. This year: ATO=1.4, GPM=.26, EM=1.8, Interest Retention=.81, Tax Retention=.66. Last year: ATO=1.2, GPM=.29, EM=1.6, Interest Retention=.84, Tax Retention=.69.

  How do risk-return and the cost of capital impact him

For the average business leader who is not in a finance role, how do risk, return, and the cost of capital impact him or her? How can you synthesize this into the workplace?

  Difference in the payback and discounted payback of machine

A company is considering buying a machine that would give a net cost savings of $70,000 per year for 10 years. The cost of the machine is $325,000. The company's weighted average cost of capital is 12%. What is the difference in the payback and disco..

  Suppose clovix pays the special dividend

Clovix Corporation has $50 million in cash, 10 million shares outstanding, and a current share price of $30. Clovix is deciding whether to use the $50 million to pay an immediate special dividend of $5 per share, Suppose Clovix pays the special divid..

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