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On January 30, 2012, the Darden Company is considering two T-bonds as potential bonds for delivery against the June 2012 T-bond futures contract. The contract's current price is 102 8/32. The first bond has a coupon rate of 7 ¼ percent and matures on May 15, 2036. It has a current market price of 105.00. The second bond has a coupon rate of 5 ¾ percent and matures on May 15, 2034. It has a current market price of 87.00. The June contract expires on June 15th and the settlement price on June 15th is 114.00. The reinvestment rate available to the Darden Company is 3 percent. Determine which bond would be the cheapest-bond-to-deliver. Show all your calculations.
If the relevant tax rate is 31 percent, what is the aftertax cash flow from the sale of this asset?
The company's cost of equity is 14 percent, and its pretax cost of debt is 8 percent. The tax rate is 38 percent. What is the company's target debt-equity ratio
You are analyzing the cost of debt for a firm. You know that the firm’s 14-year maturity, 7.0 percent coupon bonds are selling at a price of $653.03. The bonds pay interest semiannually. If these bonds are the only debt outstanding for the firm, answ..
Talbot Enterprises recently reported an EBITDA of $9.0 million and net income of $2.7 million. It had $3.6 million of interest expense, and its corporate tax rate was 40%. What was its charge for depreciation and amortization? Enter your answer in do..
Assuming an ordinary tax rate of 35%, compute the firm's earnings after taxes and earnings available for common stockholders .
You have determined that Layton’s information ratio is 0.25. What must Layton’s tracking error be relative to its benchmark?
You are bullish on Telecom stock. The current market price is $50 per share, and you have $5,000 of your own to invest. You borrow an additional $5,000 from your broker at an interest rate of 8% per year and invest $10,000 in the stock. How far does ..
What portion of the cost may Berry elect to treat as an expense rather than as a capital expenditure,
Can you devise a different strategy to test the explanatory power of size in the presence of the market factor.
Calculate its basic earning power (BEP), its return on equity (ROE), and its return on invested capital (ROIC).
The company you work for will deposit $150 at the end of each month into your retirement fund. Interest is compounded monthly. You plan to retire 25 years from now and estimate that you will need to withdraw $2,000 per month during retirement, which ..
What effect(s) did the Enron situation have on the financial reporting methods and why is it important?
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