Estimate the futures price you should find on the exchange

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1. New Jet Airlines plans to issue 16-year bonds with a par value of $1,000 that will pay $40 every six months. The bonds have a market price of $1,340. Flotation costs on new debt will be 7%. If the firm has a 35% marginal tax bracket, what is cost of existing debt?

2. A yen futures contract settles 270 days from today. If spot yen is 97, one year yen interest rate is 1% and the one year US interest rate is 3%. Estimate the futures price you should find on the exchange. Write required calculation

Reference no: EM132018150

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