Coupon rate of new bonds be in order for issue to sell

Assignment Help Financial Management

Reference no: EM131056810

Suppose XG is considering an expansion which it will finance through additional bond sales. Current outstanding XG bonds are selling for $1,148.77. These have a face value of $1,000, and a coupon of 8% and 10 years to maturity. If interest is paid semiannually, what must the coupon rate of the new bonds be in order for the issue to sell at par? The issue will also mature in 10 years and pay semiannual coupons. Please show all work, including formula used.

Reference no: EM131056810

Questions Cloud

The growth rate in dividends is expected : Bayou Okra Farms just paid a dividend of $3.85 on its stock. The growth rate in dividends is expected to be a constant 4 percent per year indefinitely. Investors require a return of 12 percent for the first three years, a return of 10 percent for the..

What is the price if comparable preferred yield : TTK Corp preferred stock pays a $10 annual dividend per share. What is the price of a share of TTK preferred, if similar risk preferred yield 8%? What is the price if comparable preferred yield 11%?

What is the value of hodges common stock : A security analyst has forecast the dividends of Hodges Enterprises for the next three years. His forecast is D1=$1.50; D2=$1.75; D3=$2.20. He has also forecast a price in three years of $48.50. The rate of return for similar risk common stock is 14%..

Zero coupon bonds have face value : XH zero coupon bonds have a face value of $1,000 and mature in 18 years. They currently sell for $80.81 today. How much interest does it accrue for tax purposes in the one year starting today?

Coupon rate of new bonds be in order for issue to sell : Suppose XG is considering an expansion which it will finance through additional bond sales. Current outstanding XG bonds are selling for $1,148.77. These have a face value of $1,000, and a coupon of 8% and 10 years to maturity. If interest is paid se..

Issued some new preferred stock : E-Eyes.com just issued some new preferred stock. The issue will pay an annual dividend of $15 in perpetuity, beginning 20 years from now. If the market requires a return of 4.5 percent on this investment, how much does a share of preferred stock cost..

Earnings to fuel growth-what is the current share price : Metallica Bearings, Inc., is a young start-up company. No dividends will be paid on the stock over the next nine years because the firm needs to plow back its earnings to fuel growth. If the required return on this stock is 12 percent, what is the cu..

Percentage change in the price of bonds : Bond J has a coupon rate of 4.2 percent. Bond S has a coupon rate of 14.2 percent. Both bonds have ten years to maturity, make semiannual payments, and have a YTM of 9.4 percent. If interest rates suddenly rise by 2 percent, what is the percentage ch..

Coupon maturity-what is the bond current yield : To calculate the number of years until maturity, assume that it is currently January 15, 2013. Company (Ticker) Coupon Maturity Last Price Last Yield EST $ Vol (000’s) Xenon, Inc. (XIC) 7.100 Jan 15, 2037 94.353 ?? 57,379 Kenny Corp. (KCC) 7.290 Jan ..

User Account

All Pages