Many bonds must the outlet sell to raise the money

Assignment Help Financial Management
Reference no: EM131070613

The Outlet needs to raise $3.2 million for an expansion project. The firm wants to raise this money by selling zero coupon bonds with a par value of $1,000 that mature in 20 years. The market yield on similar bonds is 7.8%. How many bonds must the Outlet sell to raise the money it needs? (semi annual compounding) (show all work)

Reference no: EM131070613

Questions Cloud

What is the projects financial break-even point in units : Blake’s Skiing Shop invested $400,000 to develop a new type of skateboard. The variable costs were $65 per unit and fixed costs were $175,000. The boards are expected to sell for $100 each. What is the project’s financial break-even point in units?
Bracketed income tax system-what is your marginal tax rate : The Nation of Taxylvania uses a bracketed income tax system. The tax brackets are listed below. What is your marginal tax rate?
Debt paying-what is cost of equity : Your boss has asked for your help in analyzing a company, Dragon, Inc., and you determine the following: Dragon has $50 million in debt paying 10% annually, while the equity is valued at $100 million. The WACC for the company is 12 %. If the corporat..
What is the annual operating cash flow of project in year : Bottoms Up Diaper Service is considering the purchase of a new industrial washer. It can purchase the washer for $1,800 and sell its old washer for $600. The new washer will last for 6 years and save $500 a year in expenses. If the firm uses straight..
Many bonds must the outlet sell to raise the money : The Outlet needs to raise $3.2 million for an expansion project. The firm wants to raise this money by selling zero coupon bonds with a par value of $1,000 that mature in 20 years. The market yield on similar bonds is 7.8%. How many bonds must the Ou..
Discuss the different types of notes-bills and bonds : Discuss the different types of notes, bills, and bonds that are sold in the U.S. Treasury market. Discuss the different participants in the markets. Discuss how arbitrage opportunities affect the different market participants and the types of interes..
Macaulay duration modified duration : Find the duration of a bond with settlement date June 1, 2012, and maturity date November 25, 2021. The coupon rate of the bond is 8%, and the bond pays coupons semiannually. The bond is selling at a yield to maturity of 9%. Macaulay duration Modifie..
Calculate the NPV-IRR and Payback of this investment : A new plant to produce steel tubing requires an initial investment of $10 million. It is expected an additional investment of $ 5 million in year 3 and an investment of $ 3 million in year 6. Annual operating cost will be $ 3 million. The Annual reve..
Which of the three projects has the highest present value : The three proposals are listed below. An actuarial table indicated that Allison, age 37 at the time of the accident, had an anticipated life expectancy of 40 more years. Assume a discount rate of 6 percent is used, which of the three projects has the..

Reviews

Write a Review

Financial Management Questions & Answers

  Hat is the return on assets and return on equity

The Carpentry Shop has sales of $398,600, costs of $254,800, depreciation expense of $23,400, interest expense of $1,200 and a tax rate of 30 percent. What is the net income for this firm? The Next Life has sales of $450,000, total assets of $150,000..

  What was the real return on your investment

You purchased one GBK, Inc. 8 percent coupon bond one year ago for $1,090. The bond makes annual payments and matures four years from now. You sell the bond today when the required return is 4 percent. The inflation rate was 1.4 percent over the past..

  Project requires an initial cash outlay

A project requires an initial cash outlay of $95,000 and has expected cash inflows of $20,000 annually for 9 years. The cost of capital is 10%. What is the project’s IRR?

  Proposed expansion of an existing subsidiary

You are evaluating a proposed expansion of an existing subsidiary located in Switzerland. The cost of the expansion would be Fr 15 million. The cash flows from the project would be Fr 4.1 million per year for the next five years. What is the NPV in d..

  What is the cost of preferred stock to the firm

XYZ Corp. has an 8 percent preferred stock that is currently selling for $120 per share. If the par value is $100, what is the cost of preferred stock to the firm?

  What is the yield to call if they are called in five years

Kaufman Enterprises has bonds outstanding with a $1,000 face value and 10 years left until maturity. They have an 10% annual coupon payment, and their current price is $1,175. The bonds may be called in 5 years at 109% of face value (Call price = $1,..

  Which it will finance through additional bond sales

Suppose XG is considering an expansion which it will finance through additional bond sales. Current outstanding XG bonds are selling for $1,148.77. These have a face value of $1,000, and a coupon of 8% and 10 years to maturity. If interest is paid se..

  Expect based on your estimate of the dividend growth rate

In mid-2015, Coca-Cola Company (KO) had a share price of $39. Its dividend was $1.00 per year, and you expect Coca-Cola to raise this dividend by approximately 7% per year in perpetuity.If Coca-Cola’s equity cost of capital is 8%, what share price wo..

  National trucking has paid an annual dividend

National Trucking has paid an annual dividend of $1.00 per share on its common stock for the past fifteen years and is expected to continue paying a dollar a share long into the future.

  What specific investment actions would you suggest

A hedge fund has a capital of $100 million and invests in a long/short strategy on the U.S. equity market, with a long bias. It follows a 150/50 strategy meaning 150% long and 50% short. Shares can be borrowed from a primary broker. The primary broke..

  Make equal semi-annual payments-what is the EAR of the loan

Fairfax Paint just borrowed 66,800 dollars. The terms of the loan require the company to make equal semi-annual payments forever. The first semi-annual payment is due in 6 months. If the regular semi-annual loan payment is 4,800 dollars, then what is..

  Develop the executive summary

Develop the Executive Summary and Section 5, 'Summary, Recommendations and Conclusion', which includes your formal recommendation to the company.

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