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Tom Cruise Lines Inc. issued bonds five years ago at $1,000 per bond. These bonds had a 30-year life when issued and the annual interest payment was then 14 percent. This return was in line with the required returns by bondholders at that point as described below:
Real rate of return
5
%
Inflation premium
Risk premium
4
Total return
14
Assume that five years later the inflation premium is only 3 percent and is appropriately reflected in the required return (or yield to maturity) of the bonds. The bonds have 25 years remaining until maturity.
Compute the new price of the bond. Use Appendix B and Appendix D for an approximate answer but calculate your final answer using the formula and financial calculator methods. (Do not round intermediate calculations. Round your final answer to 2 decimal places. Assume interest payments are annual.)
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Prior to C's affirmation valuation for Rs. 15,000 in the estimation of area and structures would be recorded furthermore, procurement for terrible obligations would be brought upto Rs. 820.
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Suppose a certain item increased in price by 19% a total of 4 times and then decreased in price by 7% a total of 2 times. By what overall percent did the price
Businesses collect and store data on us all of the time. They use this data in marketing, providing products and services and conducting business with us.
Congratulations! Due to your education, skills you have learned, and hard work, you have successfully managed your fledgling start-up company to the point where you are seriously considering an Initial Public Offering (IPO).
Crane, Inc., has a bond issue maturing in seven years that is paying a coupon rate of 9.5 percent (semiannual payments).
Boatler Used Cadillac Co. requires $800,000 in financing over the next two years. The firm can borrow the funds for two years at 9 percent interest per year.
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