Calculate the present value of total outflows

Assignment Help Financial Accounting
Reference no: EM132960807

The Harding Corporation has $50.1 million of bonds outstanding that were issued at a coupon rate of 10.75 percent seven years ago. Interest rates have fallen to 9.5 percent. Preston Alter, the vice-president of finance, does not expect rates to fall any further. The bonds have 18 years left to maturity, and Preston would like to refund the bonds with a new issue of equal amount also having 18 years to maturity. The Harding Corporation has a tax rate of 30 percent. The underwriting cost on the old issue was 2.6 percent of the total bond value. The underwriting cost on the new issue will be 1.8 percent of the total bond value. The premium for calling the bond early is 7.5 percent.

Problem a. Compute the discount rate. (Round the final answer to 2 decimal places.)

Problem b. Calculate the present value of total outflows. (Enter the answers in whole dollars, not in millions. Round "PV Factor" to 3 decimal places. Do not round intermediate calculations. Round the final answer to nearest whole dollar.)

Problem c. Calculate the present value of total inflows. (Enter the answers in whole dollars, not in millions. Round "PV Factor" to 3 decimal places. Do not round intermediate calculations. Round the final answer to nearest whole dollar.)

Problem d. Calculate the net present value. (Enter the answers in whole dollars, not in millions. Round "PV Factor" to 3 decimal places. Do not round intermediate calculations. Round the final answer to nearest whole dollar. Negative amount should be indicated by a minus sign.)

Problem e. Should the Harding Corporation refund the old issue?

Reference no: EM132960807

Questions Cloud

Prepare the statement of cash flows using the visual method : The list of items to be included in the 2016 statement of cash flows for the Boardman Company: Prepare the statement of cash flows using the visual method
Compute the revised depreciation : Whispering Winds Corp. purchased a piece of equipment for $64,000. It estimated a 8-year life and $2,560 salvage value. Compute the revised depreciation
What are the amounts to appear in the statement : What are the amounts to appear in the Statement of Financial position for the year ended September 30, 2020
Strategic people management : Critically assess the key principles and theories underlying strategic people management and explain how their application enhances organisational
Calculate the present value of total outflows : Calculate the present value of total outflows. (Enter the answers in whole dollars, not in millions. Round "PV Factor" to 3 decimal places.)
What are china payment systems in detail : What are China's payment systems in detail?
What is the net income : There was an installment account written-off amounting to P25,000 in 2016 pertaining to the 2016 sales. What is the net income for 2016
Description of the organization strategic planning process : Can you develop a report on the HR strategy of your current or recent employer or another of an organization of your choosing with which you are familiar?
How much need jack and jill in the retirement account : How much need Jack and Jill in their retirement account ( at the beginning of their retirement) to generate this future cash flow?

Reviews

Write a Review

Financial Accounting Questions & Answers

  How many years would take to double money

How many years would it take to double my money if found 3 banks that paid 3%, 6%, and 9% annual rate of return respectively

  Recording cash discounts

Schrand Corporation purchases materials from a supplier that offers credit terms of 2.5/15, n/60. It purchased $16,000 of merchandise inventory

  What is the real value of the rent in period

What is the maximum amount of dollars that he could borrow in period 1? Find the real value of this amount and add it to the rental value of period 1

  Compute the amount of any impairment loss

Compute the amount of any Impairment Loss that would be allocated to the Equipment at 30 June 20X1 in accordance with the requirements of AASB 136.

  What journal entries will jol make on that date

Assume that the rice is subsequent sold by Jol on June 1, 2012, for $1,200 per ton. What journal entries will Jol make on that date?

  Prepare the appropriate journal entry to record disposition

Prepare the appropriate journal entry to record the disposition of the delivery truck. The delivery truck originally cost $26,000 in 2021 and $4,000 was spent

  Analyze sandra actions using fraud triangle as framework

Discuss whether you should reveal Sandra's actions to your uncle and why or why not. Analyze Sandra's actions using the fraud triangle as the framework.

  Prepare a reporting template for nfp

For each task below, explain how theories, concepts, models, frameworks and/or technical competencies, from the accounting major(s) have applied. Prepare a Reporting Template for NFP (Not-For-Profit) tier 2 Reporting

  Prepare journal entries to record the production activities

Prepare journal entries to record the following production activities for Hotwax.

  Which the entry to record the sales would include

Omega.com sold 25 jet skis for $7,000, which cost $5,000. Which the entry to record the sales would include? Credit to finished goods inventory $5,000

  What the depreciation expense for year would be

Assuming a revised estimated total life of 6 years and no change in the salvage value, the depreciation expense for Year 3 would be

  How much of the should each of these investors receive

How much of the $30,000 should each of these investors receive if they are to share in the $30,000 profit in proportion to their investment

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!

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