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Calculate the current price of a $1,000 par value bond that has a coupon rate of 6 percent, pays coupon interest annually, has 16 years remaining to maturity, and has a current yield to maturity (discount rate) of 11 percent. (Round your answer to 2 decimal places and record without dollar sign or commas)
The Big Ben Company has issued bonds which now have 15 years to maturity. The bonds have a par value (i.e. face value) of $1,000, coupon rate of 9% and the coupon payment is made annually. What is the relationship between the value of the bond today ..
What price would an investor requiring a 7% return pay for a stock which just declared a dividend of $5.00 if the expected dividend and earnings growth rate was estimated at 0%? Please show work.
Johnson Tire Distributors has an unlevered cost of capital of 12 %, a tax rate of 34 %, and expected earnings before interest and taxes of $1,600. The company has $2,700 in bonds outstanding that have a 7 % coupon and pay interest annually. The bonds..
Gilmore, Inc., just paid a dividend of $2.65 per share on its stock. The dividends are expected to grow at a constant rate of 6 percent per year, indefinitely. Assume investors require a return of 10 percent on this stock. What is the current price? ..
Suppose company A today enters a contract with company B for delivering 10,000 units of commodity c three months from today. Company A wants to hedge the risk of this position. Unfortunately, there is no futures market for commodity c. Find the hedgi..
Suppose Stark Ltd. just issued a dividend of $2.14 per share on its common stock. The company paid dividends of $1.80, $1.89, $1.96, and $2.07 per share in the last four years? If the stock currently sells for $60, what is your best estimate of the c..
For capital budgeting and cost of capital purposes, the firm should assume that each dollar of capital is obtained in accordance with its target capital structure, which for many firms means partly as debt, partly as preferred stock, and partly commo..
US Parcel Inc has 6100 shares of stock outstanding and a current stock price of $12.00 per share. The company has no debt. The company is currently short on cash and announces that instead of a cash dividend they will pay the following stock dividend..
Assume that you have been hired as a consultant by CGT, a major producer of chemicals and plastics, including plastic grocery bags, styrofoam cups, and fertilizers, to estimate the firm's weighted average cost of capital. The firm's tax rate is 40%. ..
Bond P is a premium bond with a 12 percent coupon. Bond D is a 6 percent coupon bond currently selling at a discount. Both bonds make annual payments, have a YTM of 9 percent, and have five years to maturity. Assume these bonds have a face value of $..
Suppose that a firm has, as of this year, an Earnings Before Interest and Taxes of $117 million, Depreciation of $10 million, has bought $25 million in machinery, has sold $12 million in old machinery for cash, has had an increase in Accounts Receiva..
Andiola Corporation is evaluating whether to lease or purchase equipment. Its tax rate is 30 percent. If the company purchases the equipment for $1,500,000 it will depreciate it over 5 years, using straight-line depreciation. Calculate the cost of pu..
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