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Moon software Inc. is planning to issue two types of 25-year. noncallable bonds to raise a total of $6 million, $3 million from each type of bond. First, 3,000 bonds with a 10% semiannual coupon will be sold at their $1,000 par value to raise $3,000,000. These are called "par" bonds. Second, Original Issue Discount (OID) bonds, also with a 25-year maturity and a $1,000 par value, will be sold, but these bonds will have a semiannual coupn of only 6.25%. The OID bonds must be offered at below par in order to provide investors with the same effective yield as the par bonds. How many OID bonds must the firm issue to raise $3,000,000? Disregard flotation costs, and round your final answer up to a whole number of bonds.
Suppose you purchase a share of The Ludwig Corporation stock for $21.40. You expect it to pay dividends of $1.07, $1.1449, and $1.2250 in Years 1, 2, and 3, respectively, and you expect to sell it at a price of $26.22 at the end of 3 years.
Objective type questions on cost of capital and capital budgeting and rule states that a typical investment project with an IRR that is less than the required rate should be accepted
What is the difference between a 401-K and an IRA? Should I have both? Can I have both? How does a 401-K fit into retirement planning and how does an IRA fit into retirement planning?
You want to have $82,000 in your savings account 13 years from now, and you're prepared to make equal annual deposits into the account at the end of each year. If the account pays 7.30 percent interest, what amount must you deposit each year?
How much do you need to save each month for this purpose assuming that you have no money saved as of today ?
You have found the return on equity to be 14.3 percent. Sales were $1,735,000, the total debt ratio was 0.35, and total debt was $648,000.
The Jones Company's common stock has a beta of 1.2. The risk-free rate is 4%. The expected market rate of return is 12%. What is the required rate of return on the security?
What are some of the factors you should consider when buying a bond?
Use finance theory to explain and critique the key points that the authors are trying to communicate.
Jane is planning investing in three different stocks or creating three distinct two-stock portfolios. Jane considers herself to be a rather conservative investor.
Jess sold a piece of equipment she used in her business. The equipment cost Jess $51,500 several years ago and had accumulated depreciation taken in the amount of $20,300. Jess sold the equipment for $35,000.
The security's price will change (up or down) by 10% during the year, and the risk-free annual effective interest rate is 5%. The no-arbitrage price of the option is $100. Use risk-neutral probabilities to find the exercise price for the option.
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