1) Firm's bonds have maturity of 14 years with a= $1,000 face value, have 8% semi-annual coupon, are callable in 7 years at $1,078, and presently sell at a price of $1,144.50.
a) Determine their nominal yield to maturity?
b) What is their nominal yield to call?
2) Hybrid hydro plants Inc which has the marginal tax rate equal to 34%, has favoured stock which pays a constant dividend equal to= $15 per share. Stock presently sells for =$125. If company incurs 3% flotation cost each time it issues favoured stock, determine the cost of issuing favoured stock?