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You are considering an investment in 30-year bonds issued by Moore Corporation. The bonds have no special covenants. The Wall Street Journal reports that one-year T-bills are currently earning 0.40 percent. Your broker has determined the following information about economic activity and Moore Corporation bonds: Real risk-free rate = 0.33% Default risk premium = 1.55% Liquidity risk premium = 0.90% Maturity risk premium = 1.05% a. What is the inflation premium? (Round your answer to 2 decimal places. (e.g., 32.16)) Inflation premium % b. What is the fair interest rate on Moore Corporation 30-year bonds? (Round your answer to 2 decimal places. (e.g., 32.16))
A company's 7% coupon rate, semiannual payment, $1,000 par value bond that matures in 25 years sells at a price of $733.23. The company's federal-plus-state tax rate is 30%. What is the firm's after-tax component cost of debt for purposes of calculat..
If the required return on this stock is 10 percent, what is the current share price?
A partial balance sheet and income statement for King Corporation follow: The trade receivables at December 31, 2010, were $280,000, net of an allowance of $8,000, for a gross receivables figure of $288,000. The inventory at December 31, 2010, was $5..
You are an analyst evaluating Up-and-Coming Airlines Inc., a very hot potential acquisition candidate your company is considering.
Calculate the patient volume needed per month to cover monthly fixed and variable costs (breakeven).
Calculate the coefficient of correlation
What is the real return on long-term government bonds? What is the real return on long-term corporate bonds?
A series of quarterly cash flows began with the first cash flow on April 1,1990 and ends with the last cash flow on January 1,2000. The first quarterly cash flow is equal to $24,000. Each successive cash flow increases $850. Determine the amount of e..
If the firm's cost of funds is 5%, what is the maximum amount the firm should pay for the investment?
Bill signed a $8,000 discount note at the bank which charged him a 6.5% discount rate. The loan is for 300 days. Please show all work. Find the proceeds: Find the effective rate:
Compare the after-tax annual cost of the two machines and decide whether Machine A should be retained or replaced by Machine B.
A three-month European call option on the index with a strike price of 245 is currently worth $10. - What is the value of a three-month put option on the index with a strike price of 245?
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