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Olympic Sports has two issues of debt outstanding. One is a 7% coupon bond with a face value of $37 million, a maturity of 10 years, and a yield to maturity of 8%. The coupons are paid annually. The other bond issue has a maturity of 15 years, with coupons also paid annually, and a coupon rate of 8%. The face value of the issue is $42 million, and the issue sells for 96% of par value. The firm's tax rate is 30%. a. What is the before-tax cost of debt for Olympic? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) b. What is Olympic's after-tax cost of debt? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)
You are depositing $3,200 in a retirement account today and expect to earn an average return of 8% per year on this money. How much additional income will you earn if you leave the money invested for 25 years instead of just 20 years?
The next year the common stock of Gold Corp will pay a dividend of 2.10 per share. If the company is growing at a rate of 4.03 percent per year and your required rate of return is 15% what is gold’s company stock worth to you? Golden Rod Corp’s prefe..
Tar Heel Healthcare has no debt financing and has a firm value of $20 million. It has a corporate tax rate of 34 percent. The firm's investors are estimated to have marginal tax rates of 31 percent on interest income and 28 percent on stock income. A..
An investment in a real estate venture will provide after tax cash flows for the next 5 years as follows: year 1, $ 7,500; year 2 $10,000; year 3 $11,000; year 4, $13,500, and year 5, $415,000. An investor would like to earn an annual return of 13%. ..
Suppose that you have $82,500 to invest and would like to purchase 1500 shares of ABC Corp.'s shares which are currently trading for $100.00 per share. Law requires that all brokers have an Initial Margin of 50% but your broker demands a 55% Initial ..
Find the solution using the mathematical equivalence formulae (such as F=P(1+i)n ), substitute and solve (with your calculator – not with the tables) for the final answer. Solve by using the proper equivalence expressions (such as F = P(F/P, i, n)) a..
The present value of an annuity of $8,000 per year for 25 years at 5% interest is: The future value of an annuity due of $10,000 per year for 20 years at 5% interest is: The most important components of any contract include the following EXCEPT
A stock has an expected return of 12 percent, its beta is 1.70, and the expected return on the market is 9.4 percent. What must the risk-free rate be?
What is the duration of a bond with three years to maturity and a coupon of 8.2 percent paid annually if the bond sells at par? (Do not round intermediate calculations and round your final answer to 5 decimal places. (e.g., 32.16161)).
Discuss the importance of using linear programming. Provide a business example as to how this type of analyiscould be used
The Cannon Ball has projected its first quarter sales at $11,200, second quarter sales at $10,900, and third quarter sales at $13,300. The firm's cost of goods sold is equal to 71 percent of the next quarter's sales. The accounts receivable period is..
Suppose that the U. S. Treasury yield curve is continuously downward- sloping. To maximize interest income over the next 10 years, should a bank portfolio manager buy securities with maturities of under 1 year or securities with maturities of 10 year..
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