### What is the price of the bonds today

Assignment Help Financial Management
##### Reference no: EM131460981

KIC, Inc., plans to issue \$5 million of bonds with a coupon rate of 8 percent and 30 years to maturity. The current market interest rates on these bonds are 7 percent. In one year, the interest rate on the bonds will be either 10 percent or 6 percent with equal probability. Assume investors are risk-neutral.

If the bonds are nonsalable, what is the price of the bonds today?

If the bonds are callable one year from today at \$1, 080, will their price be greater or less than the price you computed in (a)? Why?

#### Questions Cloud

 Total return of tips in percentage : Consider a 4.80 percent TIPS with an issue CPI reference of 201.2. total return of tips in percentage? and total return of tips in dollars? Computerized corporate planning models : Would you agree that computerized corporate planning models were a fad during the 1990s but that because of a need for flexibility in corporate planning, Breakeven probability : Breakeven Probability: Suppose you are selling a product for \$5 per unit; your competitor is also charging \$5 per unit. Describe the major organizational types of physician groups : List some of the major non-hospital and non-physician sectors of the healthcare industry. List and describe the major organizational types of physician groups. What is the price of the bonds today : KIC, Inc., plans to issue \$5 million of bonds with a coupon rate of 8 percent and 30 years to maturity. what is the price of the bonds today? What is total return of tips in dollars : Consider a 4.80 percent TIPS with an issue CPI reference of 201.2. what is total return of tips in dollars? total return of tips in percentage? Calculating the WACC for firm requires a number of inputs : Calculating the WACC for a firm requires number of inputs, many of which are estimates. which inputs do you believe are most likely to be estimated incorrectly Think of the advantage a large firm has over small firm : What do you think of the advantage a large firm has over a small firm in terms Treasury bill to the US Federal Reserve : Suppose that JP Morgan Chase sells a \$100 million Treasury bill to the US Federal Reserve

### Write a Review

#### Foreign company acquisition

Acquisition by a foreign company and the effects of that decision and the results of foreign exchange in Euro and the exchange rate differences.

#### Financial management for profit and non profit organizations

In this essay, we are going to discuss the issues of financial management in a non-profit organisation.

#### Method for estimating a venture''s value

Evaluate venture's present value, cash and surplus cash and basic venture capital.

#### Replacement analysis

This document show the Replacement Analysis of modling machine. Is replacement give profit to company or not?

Your company is considering using the payback period for capital-budgeting. Discuss the advantages and disadvantages of this technique.

#### Analysis of the investment

In this project, you will focus on one of these: the additional cost resulting from the purchase of an apple press (a piece of equipment required to manufacture apple juice).

#### Conduct a what-if analysis

Review the readings and media for this unit, including the Anthony's Orchard case study media. Familiarise yourself with the Anthony's Orchard company and its current situation.

#### Determine operational expenditures

Organisations' behaviour is guided by financial data. In the short term, such data will help determine operational expenditures; in the long term, historical data may help generate forecasts aimed at determining strategic plans. In both instances.

#### Personal financial management

How much will you have left over each half year if you adopt the latter course of action?

#### Sources of finance for expansion into new foreign markets

A quoted company is considering several long-term sources of finance for expansion into new foreign markets.

#### Long term financial planning

This assignment is designed for analyze Long term financial planning begins with the sales forecast and the key input in the long term fincial planning.

#### Explain the role of fincial manager

This assignment explain the role of fincial manager, function of manger. And what are the motives of financial manager.