Reference no: EM132371663

Bond interest payments before and after taxes. Charter Corp. has issued 2,500 debentures with a total principal value of $2,500,000. Remember that the bonds are issued in units of $1,000. The bonds have a coupon rate of 7%.

a. What dollar amount of interest per bond can an investor expect to receive each year form Charter Corp.?

b. What is the Charter's total interest expense per year associated with this bond issue?

c. Assuming that Charter is in a 35% corporate tax bracket, what is the company's net after-tax interest cost associated with this bond issue?

Authorized and available shares. Aspin Corporation's charter authorices issuance of 2,000,000 shares of common stock. Currently, 1,400,000 shares are outstanding and 100,000 shares are being held as treasury stock. The firm wishes to raise $48,000,000 for a plant expansion. The sale of new common stock will net the firm $60 per share.

a. What is the maximum number of new shares of common stock the firm can sell without receiving further authorization from shareholders?

b. Based on the data given and your finding in a, will the firm be able to raise the needed funds without receiving further authorization?

c. What must the firm do to obtain authorization to issue more than the number of share found in a? 

Interest rate fundamentals: the real rate of return.  Carl Foster, a  trainee at an investment banking firm, is trying to get an idea of what real rate of return investors are expecting in today's marketplace. He has looked up the rate paid on 3-month U.S. Treasury bills and found it to be 5.5%. He has decided to use the rate of change in the Consumer Price Index as a proxy for the inflationary expectations of investors. That annualized rate now stands at 2%. Based on the information that Carl has collected, what estimate can he make of the real rate of return?