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Airborne Airlines Inc. has a $1,000 par value bond outstanding with 30 years to maturity. The bond carries an annual interest payment of $110 and is currently selling for $850. Airborne is in a 25 percent tax bracket. The firm wishes to know what the aftertax cost of a new bond issue is likely to be. The yield to maturity on the new issue will be the same as the yield to maturity on the old issue because the risk and maturity date will be similar.
a. Compute the yield to maturity on the old issue and use this as the yield for the new issue. (Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places.)
b. Make the appropriate tax adjustment to determine the aftertax cost of debt. (Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places.)
Mr. Baruch expects to earn 10% per year, on average, in his mutual fund. What should be the amount of Baruch's annual contributions ?
What is the effect on cash flows of declaring and issuing a stock dividend? Is the stock dividend reported on the statement of cash flows?
Imagine the government has released funds for creating small businesses. You are interested in establishing a small business, and you must decide which of the four forms of business organization would best suit your unique product or service.
1. the government has passed an important law that protects employees who participate in aprivate pension plan. this
Using the assumed rate of inflation,what is the annual amount drawn the first year, (solution b) worth today? Comment on your client's ability to live on this amount in retirement
consider a bank that initially has the following balance sheetassets millionsliabilities
Company A just paid an annual dividend of $4.35 a share. The stock has a market price of $110 and a dividend growth rate of 6 percent. What is the rate of return on this stock?
1. What break-even resale price in four years would make you indifferent between buying and leasing? 2. What is the present value of purchasing the car?
An investor buys a $1,000, 20 year 7 percent (interest paid semiannually) bond at par. After five years have passed, interest rates are 10 percent. How much did the investor lose on the purchase of the bond?
If the market performance can only be partially predicted then doesn't that automatically make that market something less than perfectly efficient? After all, I thought perfectly efficient markets meant everyone has access to all information and ther..
If the borrowing/lending rate is 20%, what is the opportunity set? What is the maximum that can be consumed in the first period? In the second period?
go to yahoo finance at httpfinance.yahoo.com. find and report forecasted stock prices estimates for microsoft
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