Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
Orange, Inc. is a technology company that designs cell phones, computers and operating systems among other products. Orange has recently undergone a large bond issue. This bond issue includes a number of $1000 face value bonds that are due in 1 year and promise a 5% coupon. These bonds will pay 1 annual coupon payment, which is due, along with the face value, in exactly one year. The bonds have a beta of 0.30. The market risk premium is 5% and the risk free rate is 4%. Information from the credit rating agencies indicates that the bonds have a 7% chance of defaulting. In the event of default, investors are expected to recover 95% of the amount due to them (i.e. 95% of the coupon payment and face value due to them).
a.) What is the opportunity cost of debt (i.e. expected return) for these bonds?
b.) What price should these bonds sell for in the market?
c.) What should the YTM be on these bonds?
d.) Is the expected return on these bonds equal to their YTM? Why or why not?
e.) Your colleague at work notes that these bonds have a ‘low yield' and are therefore a ‘bad' investment. He says that there are other bonds in the market with much higher yields and these, he says, are clearly better investments. Is he correct?
Aerotech, an aerospace-technology research Corporation, announced this morning that it has hired the world's most knowledgeable and prolific space researchers.
Van Roekel Corporation sells a single product. The product has a selling price of $100 each unit and variable expenses of 80 percent of sales. If the company's fixed expenses total $150,000 each year,
Either machine must be replaced at the end of its life with an equivalent machine. Which is the better machine for the firm? The discount rate is 10% and the tax rate is zero.
A firm borrows $25,000 from the bank at 12 percent compounded annually to purchase some new machinary. This loan is to be repaid in equal installments at the end of each eyar over the next 5 years. How much will each annual payment be?
How much maintenance cost should be allocated to the department B for March?
If the firm bases its decisions on the Accounting Operating Profit Break-even, then what is the variable cost pre unit under the high-capacity alternative?
An 8-year bond for Katy Corporation has a market price of $700 and a par value of $1000. If the bond has an annual interest rate of 6 percent, but pays interst semiannually, what is the bond's yeild to maturity?
At what discount rate would the company be indifferent between these two projects?
A firm incurs $70,000 in interest expenses each year. If the tax rate of the firm is 20%, what is the effective after-tax interest rate expense for the firm?
Determine using the internal rates of return criterion with an incremental analysis which will offer the largest monetary benefit to AWS if their MARR is 12%.
The Oceanside hotel is adjacent to city coliseum, a 24,000-seat arena that is home to city's professional basketball and ice hockey teams and that hosts a many concerts, TV shows.
Why is the U.S retirement system described as a three legged stool? Is it reliable?
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!
whatsapp: +1-415-670-9521
Phone: +1-415-670-9521
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd