Suppose that twin oaks four year bond had seminannual

Assignment Help Finance Basics
Reference no: EM13476811

Twin Oaks Health Center has a bond issue outstanding with a coupon rate of 7 percent and four years remaining until maturity. The par value of the bond is $1000, and the bond pays interest annually.

A. Determine the current value of the bond if present market conditions justify a 14 percent required rate of return.

B. Now suppose Twin Oaks' four-year bond had semiannual coupon payments. What would be its currrent value? (Assume a 7 percent semiannual required rate of return. However, the actual rate would be slightly less than 7 percent because a semiannual coupon bond is slightly less risky than an annual coupon bond.)

C. Assume that Twin Oaks' four year bond had a seminannual coupon but 20 years remaining to maturity. What is the current value under these conditions? (Again, assume a 7 percent semiannual required rate of return, although the actual rate would probably be greater than 7 percent because of increased price risk.)

Reference no: EM13476811

Questions Cloud

Write down a 3000-3350 word literature review on a topic of : bullwrite a 3000-3350 word literature review on a topic of your choice in criminal justice.bullinclude a title
In brief explain expectancy theory leadership continuum : q1. briefly describe expectancy theory leadership continuum theory and needs based theory. then explain one way each
Determine the projects operating cash flows in years 1 2 : you have been asked by the president and ceo of kidd pharmaceuticals to evaluate the proposed acquisition of a new
Find the firms cost of equity estimate according to dcf : golden state home health inc. is a large california-based for-profit home health agency. its dividends are expected to
Suppose that twin oaks four year bond had seminannual : twin oaks health center has a bond issue outstanding with a coupon rate of 7 percent and four years remaining until
Research the three types of bankruptcy and answer the : research the three types of bankruptcy and answer the following questionsbullwhat are some of the reasons that people
Find the future year 5 value of cash flow stream if the : consider another uneven ash flow
Fhe projects coefficient of variation cv of : consider the following probability distribution of returns estimated for a proposed project that involves a new
Is there a relationship between the 2 measurements for the : baseball stadiums vary in age style size and in many other ways. fans might think of the size of the stadium in terms

Reviews

Write a Review

Finance Basics Questions & Answers

  Present value of future cash flow

A company anticipates taxable cash receipt of $70,000 in year five of project. The company's tax rate is 30% and its discount rate is 12%. The present value of this future cash flow is closest to:

  What is the real rate of return on these bonds

Getty Markets has bonds outstanding that pay a 5% semiannual coupon, have a 5.5% yield-to-maturity, and a face value of $1,000. The current rate of inflation is 4%. What is the real rate of return on these bonds?

  Difficulties in organizing a casebook

What are some of the difficulties which can be present when organizing the casebook?

  Coverage ratios sectors inc has an ebit of 7221643 and

1.which one of the following statements about trend analysis is not correct?2.coverage ratios sectors inc. has an ebit

  What considerations might be important in the selection

Assuming that you have decided upon a negotiated contract, what are the first questions that you would asked. As the investment banker, what would be your first actions before offering advice?

  How is a competitor a stakeholder

It is hard to believe a competitor is a stakeholder,isn't the goal of competition to win and perhaps even dominate the market? If so, how can a company have an interest in the on going health of their competitors (except to beat them?) How is a co..

  Compute the present worth

Consider a project with initial investment of $10,000. Annuities are $3,500 for the following 10 years with increment of 10% each year. The salvage value of the project is $4,000. The minimum attractive rate of return is 10%.

  Interesting though when i think of the ethical perspective

writing from the perspective of adam smith an economic recession is caused from personal self-interest private

  How many phones sold to achieve breakeven point

Fixed manufacturing costs total $1,180 per month, while fixed selling and administrative costs total $2,240. How many phones must be sold to achieve the breakeven point?

  Equivalent annual rate

I have discussion which deals with exercises in determining Equivalent Annual Rate (EAR.) This is closely related to the time value of money and deals with how frequency of compounding of interest rate affects value calculation.

  Description of present value of money

Ambrin Corp. expects to receive $2,000 per year for 10 years and $3,500 per year for next ten years. What is the present value of this 20 year cash flow. Employ a 11% discount rate.

  Calculating total amount of interest

Suppose you purchased a new Lan Rover for $67,000 on October 31, 1999. The down payment was $15,000. A bank financed the remaining balance at 12% interest rate for sixty months with monthly payments.

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