User Account

All Pages

Calculate the bonds annual interest payment

Assignment Help Financial Management
Reference no: EM131063404

Consider a $1,000 par value investment grade corporate bond which currently has a Yield to Maturity, YTM, of 5.475%. The bond has an annual coupon rate of 7.625% and is currently selling for 115.247%

First, calculate the bond’s annual interest payment.

Now calculate the bond’s PV, that is, 115.247% of its par value.

Given the two calculations you just completed, use them to find the current yield here.

If the YTM is 5.475%, and given the current yield that you calculated above, what is the Capital Gain or (LOSS). Show the work below by setting up the calculation labeling the current yield and its value, the capital gain or (loss) and its value, and the YTM of 5.475%

Was this bond selling at a premium or a discount?? Circle your answer

Reference no: EM131063404

Questions Cloud

Compute the variable overhead spending variance : Compute the variable overhead spending variance. Which project represents the best investment for Boston? Using the net present value method, what is the maximum amount that the company should invest?
What are some methods you could use to emphasize : Imagine yourself as a human resources professional who wants to alert top-level management to the importance of a policy against sexual harassment. What are some methods you could use to emphasize the importance of such a policy? What would your p..
New client on the issue of tax compliance : You have been assigned a research project for a new client on the issue of tax compliance. The research results for the client fall under a temporary regulation. Evaluate and describe two (2) types of temporary regulations and explore the effects on ..
Calculate the net present value for a project : Suppose you calculate the Net Present Value (NPV) for a project, given the project cash flows and a required rate of return of 12%. After you calculate the NPV, you discover that the actual required rate of return is 14%. The new NPV you calculate us..
Calculate the bonds annual interest payment : Consider a $1,000 par value investment grade corporate bond which currently has a Yield to Maturity, YTM, of 5.475%. The bond has an annual coupon rate of 7.625% and is currently selling for 115.247% First, calculate the bond’s annual interest paymen..
Which the pilot presses the seat at the highest position is : A mass m1of 100 kg travelling with a uniform velocity of 5 m/s along a line collides with a stationary mass m2of 1000 kg. After the collision, both the masses travel together with the same velocity.
After the phase-out for high-income taxpayers : Ellen and Rick are married with one dependent child. They have AGI of $355,300, and itemized deductions consisting of $20,000 state income taxes and $20,000 medical expenses, after applying the 10 percent of AGI limitation.  Itemized deductions allow..
Financial objective of the firm is to maximize value of firm : A company is considering two mutually exclusive projects, A and B. Project A has an NPV of $3,000,000 and Project B has an NPV of $4,000,000. What should the company do if the financial objective of the firm is to maximize the value of the firm?
Major advanced and emerging economics : Consider a large multinational consumer product company with operations in all major advanced and emerging economics. Now suppose the value of Indonesian and South African currencies drops dramatically and the value of the Chinese rmb increases dr..

Reviews

Write a Review

Financial Management Questions & Answers

  Record the carry back and carry forward decision

Colorado Company has provided you the following information. The enacted tax rate remains at 40% after year 2017. Colorado Company has determined that a valuation allowance is not necessary. Prepare the journal entry on December 31, 2017 to record th..

  The linear relation between an assets expected return

The linear relation between an assets expected return and its Beta coefficient is the:

  Riskier divisions get a greater share of capital

If the overall company weighted average cost of capital (WACC) were used as the hurdle rate for all divisions, would more conservative or riskier divisions get a greater share of capital? Explain your reasoning.

  How much retained earnings did the firm have

Given the following information about Elkridge Sporting Goods, Inc., construct a balance sheet for June 30, 2011. It had accounts payables of $67,855, notes payables of $36,454, long-term debt of $105,573, and common stock of $150,000. How much retai..

  Negotiating price and terms and ?nancing the transaction

Olivia Kane has just graduated from college and needs to buy a car to commute to work. She estimates that she can afford to pay about $450 per month for a loan or lease and has about $2,000 in savings to use for a down payment. Develop a plan to guid..

  Injured in an automobile accident

Carlos, a citizen of Maine, is injured in an automobile accident in Vermont.  Alex, the driver of the other car, is a citizen of Rhode Island. Carlos wants Alex to pay $125,000 in medical expenses and car repairs. What court would Carlos begin in and..

  Standard deviation of returns for a single stock

Suppose that the standard deviation of returns for a single stock A is 25%, and the standard deviation of the market return is 15%. if the correlation between stock A and the market is 0.6, then the stocks beta is?

  Taxicorp is entirely financed with equity

TaxiCorp is entirely financed with equity. Its risk premium is 14%. TaxiCorp calculates that a new project has a return of 16.5%. What other information is necessary to determine whether TaxiCorp should take the project? When should TaxiCorp accept t..

  Short-sale proceeds and collateral are credited

You short-sell 500 shares of a stock for one year – i.e., you borrow and sell the shares at time t = 0, and you purchase and return the shares at time t = 1. At time t = 0, the ask and bid prices of the stock per share are 75.25 and 73.50, respective..

  Capital gains yield represents the total return

Which of the following statements is true? The capital gains yield represents the total return earned by an investor. An increase in an unrealized capital gain will increase the capital gains yield. The dividend yield can be described as the increase..

  How does this impact the companys current cost of debt

A company issues debt at 8%. A year later, the risk free rate on government bonds has increased 100 basis points to 5% from 4%. If nothing else has changed, how does this impact the company's current cost of debt? What happens to the company's cost o..

  Expansion will increase after-tax operating cash

Stonehedge Dairy will expand its organic yogurt production capacity at a cost of $10,000,000. The expansion will increase after-tax operating cash by $1.4 million dollars per year for the next 20 years. Stonehedge's WACC is 10%. To raise the $10,000,..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd