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New York Waste (NYW) is considering refunding a $50,000,000, annual payment, 14 percent coupon, 30-year bond issue that was issued five years ago. It has been amortizing $3 million of flotation costs on these bonds over their 30-year life. The company could sell a new issue of 25-year bonds at an annual interest rate of 11.67 percent in today's market. A call premium of 14 percent would be required to retire the old bonds, and flotation costs on the new issue would amount to $3 million. NYW's marginal tax rate is 40 percent. The new bonds would be issued when the old bonds are called.
The amortization of flotation costs reduces taxes, and thus provides an annual cash flow. What will the net increase or decrease in the annual flotation cost tax savings be if refunding takes place?
Cassandra sells property for a sales valueof $150,000. In addition, Lana, the buyer, pays $5,000 in property taxes that had accrued during th year while property was still legally owned through Cassandra.
Candy and I were going through the last year's financial statements (year ended 31 December 2012) and I discovered that the income tax expense account was significantly lower than the income tax the company actually paid to the Australian Taxation Of..
A loan commitment of $4.29 million has an up-front fee of 50 basis points and a back-end fee of 25 basis points. The take down on the loan is 60 percent. Calculate the total fees you will pay on this loan commitment. (Round your answer to 2 decima..
Using the fees outlined in part (c), what is the borrower's effective borrowing cost (effective rate) if he plans on holding the loan for 7 years.
You ask for a quote on the peso at the bank in the airport, and they give you a bid-ask quote of 0.22-0.26 USD/ARS. How many USD will you be able to recover if you trade with this bank?
What do you understand by a Capital Structure? What basic principles will you advocate in matter of deciding on a proper pattern of capital structure for company?
The company needs a cash infusion of $1.5 million, and it can issue equity or issue debt with an interest rate of 9 percent. Assume there are no corporate taxes.
Calculate the projects annual project free cash flow (PFCF) for each of the next five years where the firms tax rate is 35%.
What are the convexities of the 2 portfolios? To what extent does (a) duration and (b) convexity explain the difference between the percentage changes calculated in part c?
Suppose the following information about a five stock portfolio, Calculate the expected return on the portfolio based on a Treasury bill yield of 4 percent and an expected market return of 13%.
If the weighted average cost of capital is 14%, what is the firm's value of operations, in millions?
Forecast the future 5-year spot rate for the won (versus the dollar) using the Shoesmith Wave forecast and the forecast from the financial markets.
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