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Following a substantial earthquake, a major West Coast university suffered $100 million in property damage. Suppose that this loss enabled the university to borrow an additional $100 million worth of tax-exempt bonds. The university issues 20-year zero-coupon bonds yielding 7% to maturity – that is, the university will pay bondholders $100 million x 1.07^20, or $386.97 million, at maturity. Any gift money raised from friends of the university can be invested to earn 10% in riskless taxable bonds.
How much the university raise in gifts to pay off its bond obligation at maturity?
How would your answer change if the bonds matured in 30 years rather than in 20 years?
Calculate the required annual payment if the bank's interest rate is 10% and four payments are to be made.- Calculate the required annual payment if the bank's interest rate is 8% and five payments are to be made.
Mike Bayles has just arranged to purchase a $460,000 vacation home in the Bahamas with a 25 percent down payment. The mortgage has a 5.2 percent stated annual interest rate, compounded monthly, and calls for equal monthly payments over the next 30 ye..
Explain the parts of the business plan
You have been asked to calculate the debt ratio for a firm that has following components to its financing firms: the firm has 1 million shares outstanding,trading at $50 per share, the firm has &25 milion in straight debt,carrying a market interest r..
How much will be due at the end of 10 years?- What will be the yield to the lender if it is repaid after 8 years?- If 1 point is charged in (b) what will be the yield to the lender?
A project that costs $69,215.00 to install will provide annual cash flows of $20,000.00 for each of the next 12 years. Calculate the NPV if the discount rate is 29.10%? How high can the discount rate be before you would reject the project (i.e. What ..
How do I Calculate the weighted average of the different bonds YTMs and determine the total market value of the bonds outstanding?
Romboski, LLC, has identified the following two mutually exclusive projects: Year Cash Flow (A) Cash Flow (B) 0 −$ 57,000 −$ 57,000 1 33,000 20,300 2 27,000 24,300 3 19,500 29,000 4 13,400 25,300 Requirement 1: (a) What is the IRR for each of these p..
Company Oakland has 100 shares of common stock outstanding. Its current stock price is $10 per share. Its current book value is $800 and total debt is $400. The company has $300 of excess cash. If the company uses the excess cash to buy back its shar..
You have $250,000 to invest in a portfolio containing Stock X and Stock Y. Your goal is to create a portfolio that has an expected return of 13.88 percent. What is the beta of your portfolio?
Briefly describe the fund profile.- Based on the chart, what has been the performance of this fund over the period of time shown?
A share of common stock has just paida dividend of $2.50 (D0). If the expected long run growth rate for this stock is 4 percent per year, and if investors require a 12 percent rate of return,what is the price of the stock?
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