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Q1. What did you pay for the bond? Q2. If you sold the bond at the end of the year, what would be your one-period return on the investment?
Prepare the entry to record the conversion on October 1, 2004. Assume that the entry to record amortization of the bond premium and interest payment has been made.
A stock pays $2.50 in dividends and has a required rate of return of 12%. Calculate the current price. What if the required rate of return is 8%
Tangible assets are $400 million and long-term debt is $175 million. Since the bonds were issued, the company has earned $200 million, paid dividends of $40 million, and repurchased $40 million of
Determine (a) the total face value of the bonds required to obtain $2.5 million and (b) the effective annual after-tax cost of debt capital.
Revise the pro forma balance sheet for 2009 assuming that any external funds will be in the form of notes payable.
What is the value of a common stock if the growth rate is 8 percent, the most recent dividend was $2, and investors require a 15 percent return on similar investments?
The call premium is set at $150 over par value. There is a 40% chance that the interest rate in one year will be 12%, and a 60% chance that the interest rate will be 7%. If the current interest rate
a. Suppose imports were a function of disposable income instead of income. What would be the new multiplier? How does it compare with the multiplier when imports were a function of income? b. Explai
The warrants will have a market value of $2 each when the stock sells for $42. What coupon interest rate must the company set on the bonds-with-warrants if the bonds are to sell at par?
Which of the following statements about warrants and convertibles is false?
A 7 percent bond has a yield to maturity of 6.75 percent, 10 years to maturity, a face value of $1000, and semiannual interest payments. What is the amount of each coupon payment payment?
You expect to receive $1000 at the end of each of the next three years. You will deposit these payments into an account which pays 10 percent compounded semiannually. What is the future value of the
The CFO asks you to quickly calculate the increased cost to the company of the bankers' suggestion. What is the cost?
Zumwalt's Class A bonds have the same risk, maturity, and par value, but the A bonds pay a 5.75% annual coupon. Neither bond is callable. At what price should the annual payment bond sell?
The Heuser Company's currently outstanding bonds have a 10% coupon and a 12% yield to maturity. Heuser believes it could issue new bonds at par that would provide a similar yield to maturity. If its
Question 1. Find the value of a bond with the following characteristics: (a) face value of $1,000, (b) 8% coupon rate, (c) the bond matures in 14 years, (d) the market rate of interest is 6%. Questi
a. Calculate the implied value of the warrants attached to each bond. b. Discuss the advantages to the investor of purchasing bonds with warrants instead of straight bonds?
Q1. What is the duration of this bond? Q2. If the nursing home purchases $4,224,000 worth of this bond, what would be the value of the bonds at the end of the duration period if interest rates fall
Assumed that the Financial Management Corporation’s $1,000 par-value bond had a 5.700% coupon, matured on May 15,2020, had a current price quote of 97.708, and had a yield to maturity of 6.034
Use perpetuity concept to evaluate a perpetual bond. Funds raised from the bonds will be used to repurchase outstanding shares. The effective tax rate is 30% at the corporate level.
Cosmic Communications Inc. is planning two new issues of 25-year bonds. Bond Par will be sold at its $1,000 par value, and it will have a 10% semiannual coupon.
Assuming a constant price-earnings ratio, what will be the effect of issuing new equity to finance the investment? To answer this, calculate the book value per share, the new total earnings, the
Interest rate and yield to maturity. You can use excel or financial calculator: Question 1. What is the fair value of a 2-year $100,000 T-note with no coupon payment if the current market interest r
Why is stock valuation considerably less precise than bond valuation? Can you give at least two reasons. Would it be possible to provide some industry references?