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Mullet technologies whether or not to refund a $75 million, 12 % coupon, 30-year bond issue that was sold 5 years ago. It is amortization $5 million of flotation cost of the 12 % bonds over the issue's 30 year life. Mullet's investment banks could sell a new 25-year issue at an interest rate of 10% in today's market. Neither they nor Mullet's management have anticipate will fall below 10% any time soon, but there is a chance that the interest will increase. A call premium of 12% would require retire old bonds and flotation cost on the new issue amount to $5 million. Mullet's marginal federal-plus state tax rate is 40%. The new bonds would be issued 1 month before the old bonds are called, with proceeds being invested in short term government securities returning 6% annually during the interim period. A. Perform a complete bond refund analysis. What is the bond refunding's NPV ?
Firm A is planning on merging with Firm B. Firm A will pay Firm B's stockholders the current value of their stock in shares of Firm A. Firm A currently has 2,300 shares of stock outstanding at a market price of $20 a share.
On May 20, 2004, The Wall Street Journal ran a front page story entitled "Biotech's Dismal Bottom Line: More Than $40 Billion in Losses. " The article makes many points.
Alex Meir recently won a lottery and has option of receiving one of following three prizes. Supposing an interest rate of 6%, which option would Alex choose?
Since managers are agents of stockholders, it is their professional obligation to make decisions to maximize the wealth of existing stockholders.
Computation of the number of shares to be issued for purchase of the machinery and How many shares of stock must The Pasta Maker sell to finance its new machinery
Tantrix, Inc., purchased its inventory from an Indian manufacturer at a cost of Rs.5,325,000. The dollar cost of this payable is $125,634.07 at todays spot rate. What is the spot rate today?
According to our statistical estimates, Fritz's believes that the rate of return on the project will be 13 percent. Should the Fritz Corporation invest in this new project?
If Primrose could lower its inventories and receivables by 9% each andincrease its payables by 9%, all without affecting sales or cost of goods sold, what would be the new CCC? Round your answer to two decimal places.
Further discuss the ability of central banks to manage domestic economic problems while maintaining a pegged exchange rate?
Aubey Corporation is planning two projects that have the following cash flows, At what cost of capital would the two projects have the same net present value?
Suppose you have asked to participate in a portfolio analysis and investment seminar where you will be providing data to potential investors.
Assuming you currently have 10,000 Bbls of WTI crude, the added benefit (cost) to you if you were to sell the 10,000 Bbls of WTI crude and use the proceeds to purchase and refine ANS crude is closest to:
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