Estimate of bonds remaining life

Assignment Help Finance Basics
Reference no: EM133073164

Rodger Corporation's 12% coupon rate, semiannual payment, $1,000 par value bonds, which mature in 25 years, are callable 6 years from today at $1,025. They sell at a price of $1,278.56, and the yield curve is flat. Assume that interest rates are expected to remain at their currentlevel.

a. What is the best estimate of these bonds' remaining life?

b. If Rodger plans to raise additional capital and wants to use debt financing, what coupon rate would it have to set in order to issue new bonds at par?

Reference no: EM133073164

Questions Cloud

Carry out the expansion project : -Operating expenses (e.g. salary, insurance, inputs) = 150 million US $/year estimated for year 0 with 2% increase every year from year 1 - 9
Analyse what role leadership may have played : Evaluate in the context of the fashion retailer Boohoo which has built a multi-billion pound business based on a business model of speedy supply of fashion
Estimate the company cost of capital : After completing financial statement analysis, CEO request CFO to estimate the Company's Cost of Capital in terms of weight average cost of capital (WACC).
What annual rate does this bond pay : The point is to use excel and its functions. You pay $25 for a bond that can be redeemed in 20 years for $50. What annual rate does this bond pay
Estimate of bonds remaining life : Rodger Corporation's 12% coupon rate, semiannual payment, $1,000 par value bonds, which mature in 25 years, are callable 6 years from today at $1,025.
Record the vouchers in the petty cash record : Record the vouchers in the petty cash record. Total each column and determine the balance before replenishing the petty cash fund
Describe what ?nancial markets are : 1. Describe what ?nancial markets are. 2. Distinguish between public financial markets and corporate financial market
How much will you withdraw after 3 years : 1. Suppose you invest $10,000 in a bank account at an interest rate of 6%. How much will you have in your account at the end of two years? How much is simple in
What is the industry average price-earnings ratio : What is the industry average price-earnings ratio? What is the price-earnings ratio for Ragan, Inc.? Is this the relationship you would expect between the two r

Reviews

Write a Review

Finance Basics Questions & Answers

  Explain what action learning sets

What are the advantages of action learning sets when compared with other learning facilitation methods?

  Find rate that you are to receive from floating rate payer

You entered into a swap 2.25 years ago that has semiannual payments. You are paying the fixed payment and receiving the floating payment.

  What are airs and how do they work

Research what happened later. How did ONE's stock price perform in the mid 1990s. How would you interpret the stock-price movements in term of success of failure of its risk-management strategy?

  What is the present value of the operating cash flows

The tax rate is 34%. Assume all sales and costs occur at the end of each year. What is the present value of the operating cash flows (OCF)?

  Details of an off-exchange tailor-made loan

The information below provides details of an off-exchange tailor-made loan obtained by Royal Oceania Cruises to fund their operations.

  Calculate the items for the bank income statement

Suppose you also were told that the bank's total interest income is twice as large as its total interest expense and its noninterest income is three-fourths.

  Determining the firm cash conversion cycle-dewey corporation

Dewey Corporation has the following data, in thousands. Assuming a 365-day year, what it the firm's cash conversion cycle? You do not have previous year's

  Market capitalization rate for stock

a) If the market capitalization rate for each stock is 10%, calculate the value of each stock.

  What is his profit and what is the new fund value

Unhappy with the results, the new investor then sells the 389.09 shares. What is his profit? What is the new fund value?

  Finding impact on cost of debt if risk free rate increase

Two investors are estimating GE's stock for possible purchase. They agree on the expected value of D1 and on expected future growth rate. Further, they agree on the riskiness of the stock.

  Average internal rate of return and investment decisions

Average internal rate of return and investment decisions

  Nominal returns on investments

Explain why investors are more concerned with the real returns than the nominal returns on their investments.

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!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd