What is the value of bond when there are exactly four year

Assignment Help Financial Management
Reference no: EM131178024

A Storage Company has an unusual bond outstanding with exactly 10 years remaining until maturity and a face value of $1,000. The bond is unusual because the annual coupon payments remaining are $50 for the next five years and $100 thereafter until maturity. What is the value of this bond when there are exactly four years remaining until maturity if the yield to maturity at that time is 5 percent?

Reference no: EM131178024

Questions Cloud

The dividend is expected to grow at a constant rate : Crazee Enterprises Corporation just paid a dividend and it expects that dividend to grow by 10 percent for the next three years. After that, the dividend is expected to grow at a constant rate of 5 percent in perpetuity. If the company's stock is cur..
Based firm decides to issue three­year bond denominated : A U.S. based firm decides to issue a three­year bond denominated in 5,000,000 Russian rubles at par. The bond has a coupon rate of 17%. If the ruble is expected to appreciate from its current level of $.03 to $.032, $.034, and $.035 in years 1, 2,and..
What is ratio of market value of equity to its book value : A firm has current assets that could be sold for their book value of $40 million. The book value of its fixed assets is $78 million, but they could be sold for $108 million today. The firm has total debt with a book value of $58 million, but interest..
Shipping company should invest in a new boat : Terry Malloy is trying to decide whether his shipping company should invest in a new boat. The new boat will cost $200,000 and it will be fully-depreciated on a straight-line basis over its 10-year useful life. The new boat will have no salvage value..
What is the value of bond when there are exactly four year : A Storage Company has an unusual bond outstanding with exactly 10 years remaining until maturity and a face value of $1,000. The bond is unusual because the annual coupon payments remaining are $50 for the next five years and $100 thereafter until ma..
Planning to substantially expand its manufacturing capacity : Gardial GreenLights, a manufacturer of energy efficient lighting solutions, has had such success with its new products that it is planning to substantially expand its manufacturing capacity with a $20 million investment in new machinery. How much ext..
Outstanding with various times-to-maturity and coupon rates : XYZ currently has 21 long-term bond issues outstanding with various times-to-maturity and coupon rates. One of these bonds matures on May 1, 2031, approximately 15 years from today. It has a yield to maturity of 4.8%. For simplicity, assume that coup..
Assuming all payments are in the form of dividends : The Wei Corporation expects next year's net income to be $20 million. The firm's debt ratio is currently 40%. Wei has $14 million of profitable investment opportunities, and it wishes to maintain its existing debt ratio. According to the residual dis..
What is the current market price of zapata stock : Zapata Corporation will pay dividends of $5.00, $6.00, and $7.00 in the next three years. Thereafter, the company expects its dividend growth rate to be a constant 10 percent. If the required rate of return is 15 percent, what is the current market p..

Reviews

Write a Review

Financial Management Questions & Answers

  What was the dealer gain or loss on the change in rates

Crown Honda purchased one of its most popular motorcycle models for 965,000 yen. The FX rate for the yen was 142 yen per dollar at the time of purchase, but then rose to 171.8 yen by the time payment was made. What was the dealer’s gain or loss on th..

  Calculate earnings per share under each of economics

RAK, Inc., has no debt outstanding and a total market value of $250,000. Earnings before interest and taxes, EBIT, are projected to be $42,000 if economic conditions are normal. If there is strong expansion in the economy, then EBIT will be 18 percen..

  Established policy of paying an extra dividend

Bennet farm Equipment sales is in a highly cyclic business. Although the firm has a target payout ratio of 25%, its board realizes that strict adherence to the ratio would result in a fluctuating dividend and create uncertainty for the stockholders. ..

  What is counts unlevered beta

Counts Accounting has a beta of 1.40. The tax rate is 35%, and Counts is financed with 35% debt. What is Counts' unlevered beta?

  Determine the amount of the annual depreciation

Your firm is considering a new three-year project with unit sales expected to be 10,000 per year. They expect the unit sale price to be $15 with variable costs accounting for $8.25 per unit. Fixed costs are estimated to be $15,500 per year. Determine..

  Continuously compounding interest rates

For a Japanese bank, the option to sell 2 billion yen for 16 million USD on a date 18 months from today is worth 170 million yen. Volatility is 25%, and the continuously compounding interest rates are 3% in USD, and 1% in yen. What are the 2 billion ..

  Calculate the cost of leasing the equipment

Andiola Corporation is evaluating whether to lease or purchase equipment. Its tax rate is 30 percent. If the company purchases the equipment for $1,500,000 it will depreciate it over 5 years, using straight-line depreciation. Calculate the cost of pu..

  Compute the realized rate of return for investors

Eight years ago, Goodwynn & Wolf Incorporated sold a 29-year bond issue with a 9% annual coupon rate and a 6% call premium. Today, G&W called the bonds. The bonds originally were sold at their face value of $1,000. Compute the realized rate of return..

  The expected return and standard deviation of a portfolio

The expected return and standard deviation of a portfolio that is 30 percent invested in 3 Doors, Inc., and 70 percent invested in Down Co. are the following: 3 Doors, Inc. Down Co. Expected return, E(R) 13 % 10 % Standard deviation, σ 46 35 -

  Order to create an accurate forecast of sales

The lack of historical data makes it difficult to create a forecast and budget for a new company. Class, how many years of historical sales data do you think are necessary in order to create an accurate forecast of sales? Explain.

  Calculate the expected dividend yield

You buy a share of The Ludwig Corporation stock for $23.30. You expect it to pay dividends of $1.09, $1.15, and $1.2133 in Years 1, 2, and 3, respectively, and you expect to sell it at a price of $28.95 at the end of 3 years. calculate the growth rat..

  Determine the future value of this annuity

Assume you were planning to invest $5,000 each year for 6 years and Warren 10% per year determine the future value of this annuity if your first 5000 is invested at the end of the first year

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd