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(Cost of debt) Sincere Stationery Corporation needs to raise S500,000 to improve its manufacturing plant. It has decided to issue a S1,000 par value bond with a 14 percent annual coupon rate and a 10-year maturity. The investors require a 9 percent rate of return.
a. Compute the market value of the bonds.
b. What will the net price be if flotation costs are 10.5 percent of the market price?
c. How many bonds will the firm have to issue to receive the needed funds?
d. What is the firm's after-tax cost of debt if its average tax rate is 25 percent and its marginal tax rate is 34 percent?
Les Moore retired as president of Goodman Snack Foods Company-Supposing Mr. Moore will not retire for two more years and will not start to receive his ten payments till the end of the third year, what would be the value of his deferred annuity?
The firm's policy is to use a risk premium of 4percentage points when using the bond-yield-plus-risk-premiummethod to find ks. Flotation costs on new common stock totals 10percent, and the firm's marginal tax rate is 40 percent.
B) Create a chart showing the timing and amount of all cash flows. c) What is the initial value of the swap?
find the nominal interest rate for a debt security given the following information: real rate = 2%, liquidity premiun = 2%, defalult risk premium = 4%, maturity risk premium = 3%, and the inflation premium = 3%
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The company has determined that the existing line could be sold to a competitor for $250,000.
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a companys 6 coupon rate semiannual payment 1000 par value bond that matures in 25 years sells at a price of 656.95 the
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This problem asks you to measure the capital structure policies of The Clorox Company as of fiscal year-end 2007. Your aim will be to decide whether Clorox's use of debt financing is proper or whether, given the company's circumstances, it may pru..
What is the PV of an ordinary annuity with 10 payments of $2,700 if the appropriate interest rate is 5.5%?
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