User Account

All Pages

Calculate the price of the corporate bond

Assignment Help Finance Basics
Reference no: EM133118856

You, as an investor, are comparing two bonds: a corporate and a municipal.  They both have a face value (par) of $1,000 and a 5-year term to maturity.  The corporate bond has an 8% annual coupon and an 8.5% yield to maturity.  The municipal bond has a 6% coupon and a 5.5% yield to maturity.

  • Please calculate the Price of the corporate bond.
  • Assuming you have a 35% tax rate, what is the after-tax coupon payment that you will receive?
  • What is your after-tax return on the corporate?
  • What is the after-tax return on the municipal bond?
  • Which one provides you, the investor, the best after-tax return?

Reference no: EM133118856

Questions Cloud

Discuss performance of that currency against usd : 1. Choose a foreign currency other than USD and discuss the performance of that currency against the USD. You must first publicly disclose your choice here befo
Expect a 6-year bond : Using the same information, what interest rate would you expect a 6-year bond to have under the liquidity premium theory?
What is the total amount debited to finished goods inventory : Walter Company uses a job-order costing system to account for product costs. What is the total amount debited to Finished Goods Inventory in the current year
Objectives for children education and retirement : Based on the level of savings that Jimmy and Jane needs to achieve over the next 15 years, discuss the feasibility of his achieving his objectives for his child
Calculate the price of the corporate bond : You, as an investor, are comparing two bonds: a corporate and a municipal. They both have a face value (par) of $1,000 and a 5-year term to maturity.
Which of the two bond will be more beneficial : Which of the two bond will be more beneficial to you. Assume that your marginal tax rate is 30%.
What is the overall payout : a) You want to add positions in a 1-year K = 50 call option such that your overall payout at t = 1 will be the same for any value S1 = 50 (In other words, the p
Define cost pool, cost allocation, and cost-allocation base : Why should managers worry about product overcosting or undercosting? (35-50 words) Define cost pool, cost allocation, and cost-allocation base
Price of a three-year risk-free bond with face value : What is the price of a three-year risk-free bond with face value of $100 and coupon rate of 3.5%

Reviews

Write a Review

Finance Basics Questions & Answers

  What bid price should you set for the contract

Your company has been approached to bid on a contract to sell 4,100 voice recognition (VR) computer keyboards a year for four years.

  Explain in a paragraph how and why supply curves shift in

1. Explain in a paragraph how and why supply curves shift in? 2. Explain in a paragraph how and why supply curves shift out?

  Define the dominant form of call protection

Explain the difference between yield maintenance and defeasance prepayment penalties (or premiums). Why has defeasance become the dominant form.

  Retain repatriated employees

What are some of the tactics and approaches that can be used to retain repatriated employees?

  Calculate annual holding period return

Suppose you purchase a 3-year, 5 percent coupon bond at par and hold it for two years. During that time, the interest rate falls to 4 percent.

  Absolute advantage and a comparative advantage

Distinguish between an absolute advantage and a comparative advantage. Cite an example of a country that has an absolute

  Develop a new computer game

KADS, Inc. has spent $390,000 on research to develop a new computer game. The firm is planning to spend $190,000 on a machine to produce the new game.

  Households in the west spend an annual average

It has been reported that households in the West spend an annual average of $6050 for groceries.Assume a normal distribution with a standard deviation of $1500.

  The anticipated enterprise value of the firm at that point

Assume that in four years, BioBalance will be valued with an EBITDA enterprise exit multiple of 8.0. What will be the anticipated enterprise value of the firm at that point?

  How much will a firm need in cash flow before tax

How much will a firm need in cash flow before tax and interest to satisfy debt holders and equity holders if: the tax rate is 40%, there is $10 million in commo

  How does market value added

1. How do you define Economic Value Added? Compare this method to the traditional methods of company analysis.2. How does Market Value Added (MVA) differ from EVA?

  Do you agree with her valuation recommendation

What constant growth rate would that analyst recommend using if she believes in capital market efficiency and the Capital Asset Pricing Model? Do you agree with her valuation recommendation? Why or why not?

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