Reference no: EM131059763
Suppose your company needs to raise $38 million and you want to issue 20-year bonds for this purpose. Assume the required return on your bond issue will be 8 percent, and you’re evaluating two issue alternatives: A 8 percent semiannual coupon bond and a zero coupon bond. Your company’s tax rate is 40 percent.
a-1. How many of the coupon bonds would you need to issue to raise the $38 million? Number of coupon bonds 38000
a-2. How many of the zeroes would you need to issue? (Round your answer to 2 decimal places. (e.g., 32.16)) Number of zero coupon bonds 182438.78
b-1. In 20 years, what will your company’s repayment be if you issue the coupon bonds? (Enter your answer in dollars, not millions of dollars, i.e. 1,234,567.)
Coupon bonds repayment $ 39520000
b-2. What if you issue the zeroes? (Enter your answer in dollars, not millions of dollars, i.e. 1,234,567.) Zeroes repayment $ 182438780
c. Calculate the aftertax cash flows for the first year for each bond. (Enter your answer in dollars, not millions of dollars, i.e. 1,234,567.)
Coupon bonds $ 1824000
Zero coupon bonds $ ?
|
Principal components analysis of the object correlation
: Using the data of Table 8.8 carry out a principal components analysis of the object correlation matrix using (a) Spearman's rho and (b) Kendall's tau correlation coefficients What do you conclude?
|
|
The same bond has clean price
: Yesterday, a bond had a clean price of $927.40. Today, the same bond has a clean price of $933.80. Based on this information, you know that:
|
|
Determining the release point
: A student throws his calculator up in the air, giving it an initial velocity of 10 m/s. how long does it take the calculator to reach the height of 5.0 m above its release point?
|
|
Opportunities of equal risk
: G Corporation is considering acquiring a newer, more modern machine. The machine, which requires an initial outlay of $4.5 million, will generate cash flows of $1.1 million at the end of each year for 5 years. Investors could earn 7.5 percent elsewhe..
|
|
What if you issue the zeroes
: Suppose your company needs to raise $38 million and you want to issue 20-year bonds for this purpose. Assume the required return on your bond issue will be 8 percent, and you’re evaluating two issue alternatives: A 8 percent semiannual coupon bond an..
|
|
Atmospheres on the ground beneath the first block
: What is the smallest number of whole bricks (including the one on the ground) that can be stacked so that their weight creates a pressure of at least two atmospheres on the ground beneath the first block? (Hint: First decide which face of the bric..
|
|
What mixed costs are actually quite common
: Under the high-low method of estimating fixed and variable costs from a mixed cost the highest and lowest cost levels are identified and the difference in activity is deemed to represent variable cost.
|
|
Experiencing vertigo and disorientation
: A person is experiencing vertigo and disorientation, and is unable to stand upright. These symptoms were first experienced after a rapid pressure change. Where is the issue most likely to be found?
|
|
Natural fundamental frequency of the string
: A string of length L = 2.0 m is held with both ends fixed. Now it is vibrating with a frequency 120 Hz by an external source, and the vibration creates a standing wave with three nodes including the both ends. What is the natural fundamental freque..
|