How much is the bond worth today

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Reference no: EM13789794

Question 1. Beranek Corp. has $410,000 of assets, and it uses no debt-it is financed only with common equity. The new CFO wants to employ enough debt to bring the debt to assets ratio to 40%, using the proceeds from the borrowing to buy back common stock at its book value. How much must the firm borrow to achieve the target debt ratio?

$155,800
$164,000
$172,200
$180,810
$189,851

Question 2. Suppose a State of New York bond will pay $1,000 10 years from now. If the going interest rate on these 10-year bonds is 5.5%, how much is the bond worth today?

$585.43
$614.70
$645.44
$677.71
$711.59

Question 3. You sold a car and accepted a note with the following cash flow stream as your payment. Which was the effective price you received for the car, assuming an interest rate of 6.0%?

Years: 0 1 2 3 4

|-----------|--------------|--------------|--------------|

CFs: $0 $1,000 $2,000 $2,000 $2,000 (Points : 10)

$5,987
$6,286
$6,600
$6,930
$7,277

Question 4. Suppose you borrowed $12,000 at a rate of 9.0% and must repay it in four equal installments at the end of each of the next 4 years. How large would your payments be?

$3,704.02
$3,889.23
$4,083.69
$4,287.87
$4,502.26

Reference no: EM13789794

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