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Shanken Corp. issued a bond with a maturity of 15 years and a semiannual coupon rate of 6 percent 2 years ago. The bond currently sells for 95 percent of its face value. The book value of the debt issue is $60 million. In addition, the company has a second debt issue on the market, a zero coupon bond with 15 years left to maturity; the book value of this issue is $35 million and the bonds sell for 51 percent of par. The company’s tax rate is 40 percent.
What is the company’s total market value of debt? (Do not round intermediate calculations. Enter your answer in dollars, not millions of dollars (e.g., 1,234,567).)
Understanding the costs of capital is important. How can you compute the cost of debt? What about the cost of common equity? What are some examples ?
Rogue Industries reported the following items for the current year: Sales = $6,000,000; Cost of Goods Sold = $3,000,000; Depreciation Expense = $270,000; Administrative Expenses = $290,000; Interest Expense = $60,000; Marketing Expenses = $60,000; an..
California Retailing Inc. has sales of $4,000,000; the firm's cost of goods sold is $2,500,000; and its total operating expenses are $600,000. The firm's interest expense is $250,000, and the corporate tax rate is 40%. The firm paid dividends to pref..
Options can be used either to scale up or reduce overall protfolio risk. What are some examples of risk-increasing and risk-reducing options strategies? Explain each. Why do you think the most actively traded options tend to be the ones that are near..
A firm has days' sales in inventory of 105 days, an average collection period of 35 days, and takes 42 days, on average, to pay its accounts payable. Taken together, what do these three figures imply about the firm's operations and its cash flows?
If the demand for U.S. exports falls because of a change in foreign tastes, what will happen to the exchange rate?
Do you think that the Fed is currently concerned about stagflation in the economy? Why or why not? How did the U.S. stock market react to the last FOMC meeting? Did the S&P 500 Index go up or down?
How much savings do you need to support yourself during retirement?- How much will you contribute to your retirement? Into what type of plan(s) will you contribute?
Arlington Corporation had EBIT this year of $48,452. The firm's depreciation expense was $8,543, and its tax rate was 38%. Arlington had a net fixed asset balance of $67,399 last year, and $56,265 this year. The company had current assets and operati..
Titan Mining Corporation has 9.8 million shares of common stock outstanding and 420,000 5 percent semiannual bonds outstanding, par value $1,000 each. What is the firm's market value capital structure? If the company is evaluating a new investment pr..
Discuss what you think the ramifications should be if an insurer, or an individual or business, misrepresents themselves either deliberately or by mistake. Give an examples, fact or fiction.
Twice Shy Industries has a debt−equity ratio of 1.1. Its WACC is 7 percent, and its cost of debt is 5.6 percent. The corporate tax rate is 35 percent. What is the company’s cost of equity capital? What is the company’s unlevered cost of equity capita..
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