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This morning—the day the bond issue is to go to market—Karen, one of our investment bankers, called to let me know that two other similar issues are being marketed. Our issue is for $50 million, carrying a 5.9% coupon and a 25-year maturity. Karen recommends that we price our issue to yield 6.12%. I need to make a recommendation on how to price our issue. Since the CFO must make the final decision to proceed or not with the issue, this is of the utmost urgency.
1. Calculate the cost of repricing the bond issue.
2. Please provide the expected additional cost associated with Karen’s recommendation of pricing the issue to yield the more competitive return.
3. Provide the additional cost to the company.
You will receive a $100,000 inheritance in 20 years. Your investments earn 6% per year, compounded annually. To the nearest hundred dollars, what is the present value of your inheritance?
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An investments internal rate of return equates
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Applying the Treasurers Rule: Microsoft Corporation (Medium) At the end of its June 30, 2008, fiscal year, Microsoft Corporation reported $23.7 billion.
This risk is higher on bonds that have long maturities than on bonds that will mature in the near future.
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