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Price A $1000 par value bond will mature in 10 years. This bond pays a coupon of $90 every year. If investors require an annual return of 8%, what is the current price of this bond? Assume annual payments.
Hincapie Manufacturing is evaluating investing in a new metal stamping machine costing $30,924. Hincapie estimates that it will realize $12,000 in annual cash inflows for each year of the machine's 3-year useful life.
An investment project has annual cash inflows of $4,900, $3,400, $4,600, and $3,800, for the next four years, respectively. The discount rate is 13 percent. What is the discounted payback period for these cash flows if the initial cost is $5,200?
Your portfolio is worth $100,000 and has a beta of 1.12. You have $30,000 of stock A which has a beta of 1.50. The rest of your portfolio is composed of stock B with a beta of 0.84 and stock C with a beta of 1.06. What is the value of stock C in your..
Bond J has a coupon rate of 5 percent and Bond K has a coupon rate of 11 percent. Both bonds have 19 years to maturity, make semiannual payments, and have a YTM of 8 percent. If interest rates suddenly rise by 2 percent, what is the percentage price ..
What is the key difference between the primary and secondary securities markets? Why are the trades that occur on the secondary market important to a firm’s management?
At an output level of 48,000 units, you calculate that the degree of operating leverage is 1.40. If output rises to 60,960 units, what will the percentage change in operating cash flow be? (Do not round your intermediate calculations.)
All else equal, long-term bonds have more interest rate risk than do short-term bonds. All else equal, high-coupon bonds have more reinvestment rate risk than do low-coupon bonds. All else equal, short-term bonds have more reinvestment rate risk than..
What is the implied interest rate on a Treasury bond ($100,000, 6% coupon, semiannual payment with 20 years to maturity) futures contract that settled at 100'24?
The Walgreen Corporation is contemplating a new investment that it plans to finance using one-third debt. The firm can sell new $1000 par value bonds with a 15-year maturity at a price of $947 that carry a coupon interest rate of 12.7 percent that is..
A 20-year maturity bond with face value of $1,000 makes semiannual coupon payments and has a coupon rate of 6%. What is the bond’s yield to maturity if the bond is selling for $1,080?
Find the 3 weights to be used to determine the cost of capital (Debt, Preferred, and Common equity weights) using market value and book values. Find the component costs (%) for bonds (rd), preferred stock(rp), retained earnings(rs) and new issue comm..
A Treasury bond that matures in 10 years has a yield of 6%. A10-year corporate bond has a yield of 9%. Assume that the liquidity premium on the corporate bond is 0.5%. What is the default risk premium on the corporate bond?
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