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Nur wants to buy a bond from petrol berhad and her broker quotes a price of $1,170. She feels that the bond might be overpriced as it is more than the par value of $1000.The following information pertains to bond:-
coupon rate = 13 percent
maturity = 18 years remaining
current yield maturity (YTM) = 10 percent
i. Calculate the intrinsic value of the bond
ii. Is the bond overpriced? Justify your answer.
James purchased office equipment for his business. The equipment has a depreciable basis of $14,000 and was put in service on June 1, 2014. James decided to elect straight-line depreciation under MARCS for the asset over the minimum number of years (..
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Pasqually Mineral Water, Inc., will pay a quarterly dividend per share of $1.70 at the end of each of the next 12 quarters. Thereafter, the dividend will grow at a quarterly rate of 1.8 percent, forever. The appropriate rate of return on the stock is..
Companies U and L are identical in every respect except that U is unlevered while L has $10 million of 4.6% bonds outstanding. Assume that (1) all of the MM assumptions are met, (2) there are no corporate or personal taxes, (3) EBIT is $1.7 million, ..
Fun Toy Corporation estimates that there is 25% chance of a recession economy next year, a 50% chance of a normal economy next year, and a 25% chance of a boom economy next year. The corporation will exist until the end of next year and then it will ..
Please provide information on the implicaitons the bond issuance could have on the financial statements and the possibility of the interest rates incresing
What is the bond’s yield to maturity (YTM)?
Purchases are equal to 50% of the following quarter's sales. The sales for the first quarter of the following year are estimated at $2,100. The accounts receivable period is 30 days and the accounts payable period is 45 days. The firm will purchase _..
Consider a $100 million equity swap with semiannual payments. When the swap is established, the underlying stock is at 1,215.52. One party pays a fixed rate of 5.5% based on the assumption of 30 days per month and 360 days per year. If the stock inde..
Prepare the journal entryies for the first year of the stock-option plan and prepare the journal entry(ies) for the first year of the plan assuming that, rather than options,
A bank which starts with a loan loss reserves of 2.5 million at the beginning of the year charges off worthless loans of 1.02 million during the year, recovers.50 million on loans previously charged off and charges current income for 3.02 million pro..
Determine the expected rate of return on equity next year for Nguyen under each of the working capital policies. Which policy is riskier? Cite specific evidence to support this contention.
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