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Alibaba Company Limited sold an issue of bonds with a 10-year maturity, a $1,000 par value, a 10 percent coupon rate, and semiannual interest payments.
a. Two years after the bonds were issued, the going rate of interest on bonds such as these fell to 6 percent. At what price would the bonds sell?
b. Suppose that 2 years after the initial offering, the going interest rate had risen to 12 percent. At what price would the bonds sell?
c. Suppose the condition in part a existed. Further assume that the interest rate remained at 6 percent for the next 8 years. What would happen to the price of the bonds over time?
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You are given an investment to analyze. The cash flows from this investment are - What is the present value of this investment if 15 percent per year is the appropriate discount rate?
Quad Enterprises is considering a new three-year expansion project that requires an initial fixed asset investment of $2.97 million. The fixed asset will be depreciated straight-line to zero over its three-year tax life, after which time it will be w..
A company has net income of $181,000, a profit margin of 8.1 percent, and an accounts receivable balance of $120,370. Assuming 70 percent of sales are on credit, what is the company’s days’ sales in receivables?
Riggs, Inc. management is planning to spend $650,000 on a new marketing campaign. They estimate this will result in additional cash flows of $325,000 over the next three years. If the cost of capital is 17.5 percent, what is the NPV of this investmen..
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