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Bond valuation
An investor has two bonds in his portfolio that both have a face value of $1,000 and pay a 11% annual coupon. Bond L matures in 14 years, while Bond S matures in 1 year.
Assume that only one more interest payment is to be made on Bond S at its maturity and that 14 more payments are to be made on Bond L.
What will the value of the Bond L be if the going interest rate is 5%? Round your answer to the nearest cent.
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A lender is offering a 30-year, fixed-rate, fully-amortizing mortgage loan at 8.25% interest with 2.75 discount points. What is the effective borrowing cost for this loan if the borrower prepays the loan at the end of year 5?
Allen, Inc., has a total debt ratio of .69. What is its debt-equity ratio? (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).) Requirement 2: What is its equity multiplier?
Trevelyan Ltd sold equipment with a net book value of EUR 25,000 and recorded a gain of EUR 10,000 on disposal of non-current assets. How should this be reported in a statement of cash flows?
A borrower wants to finance an apartment building costing $2 million with a 75%, 25 year loan at the interest rate of 6%. The projects' NOI is expected to be $150, 000 during first year. Assuming that NOI and the building will increase 5% each year. ..
Alabaster Incorporated has an equity cost of capital of 14%. The debt to value ratio is .6, the tax rate is 35%, and the cost of debt is 8%. What is the cost of equity if Alabaster was unlevered?
A corporate bond has a face value of $1,000 and an annual coupon interest rate of 6%. Interest is paid annually. 12 years of the life of the bond remain. The current market price of the bond is $1,127, and it will mature at $1,000. To the 1/10 percen..
Ted owns a bond which is callable in 2.5 years. The bond has a 6 percent coupon, pays interest semiannually, has a par value of $1,000, and has a yield to call of 6.3 percent. What is the call premium if the bond currently sells for $1,044.54? Call p..
An investor is considering buying a 20-year corporate bond. The bond has a face value of $1000 and pays 6% interest per year in two semiannual payments. THus the purchaser of the bond will receive $30 every 6 months in addition to $1000 at the end of..
You purchased 2,000 shares of the New Fund at a price of $12 per share at the beginning of the year. You paid a front-end load of 4%. The securities in which the fund invests increase in value by 12% during the year. The fund's expense ratio is 2.2%...
Companies raise capital by issuing new securities in secondary markets. Preferred dividend payments are fixed amounts paid on a regular basis. Preferred stock with no fixed maturity can be valued using the present value of a perpetuity formula.
You need $28.974 at the end of 10 years, and your only investment outlet is an 8% long term certificate of deposit (compounded annually). With the certificate of deposit, you make an initial investment at the beginning of the first year. What single ..
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