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1. Bunge, Inc. issued a 25-year bond which is callable in 17 years; the face value of the bond is $1000. It has a coupon rate of 6.75% payable annually, has a call premium of $105, and is currently selling for $1012. What is the yield to call? (Caution: You want to find out the rate of return earned till the bond "called" back, not till the "maturity" of the bond.)
6.82%.
6.97%.
6.63%.
6.65%.
2. If a business has no liquid assets then negative cash flow from assets can not be sustained if the business does not have access to outside capital.
True or False
3. The World Tobacco Company is expected to pay a dividend of $5 per share at the end of year 1(D1) and the dividends are expected to grow at a constant rate of 8% forever. If the current price of the stock is $25 per share, calculate the expected return or the cost of equity capital for the firm.
20%.
28%.
25%.
32%.
Based on your own Internet research, track the changes in the Euro/USD exchange rate since the Euro was launched in 2002.
How much more/(less) is the bond worth if it is assumed the bond will be called than if it will not be called?
Calculate the 3-year par yield if interest rates are given as follows:
Milwaukee Surgical Supplies is evaluating the following projects: Project Cost IRR A $100,000 19% B 75,000 17% C 90,000 16% D 80,000 14% If the firm’s corporate cost of capital is 15% and all projects are of average risk, what is the optimal capital ..
Aria Acoustics, Inc. (AAI), projects unit sales for a new seven-octave voice emulation implant as follows: Year Unit Sales 1 88,000 2 101,000 3 115,000 4 110,000 5 91,000 Production of the implants will require $1,670,000 in net working capital to st..
Principal, Inc. is acquiring Secondary Companies for $29,000 in cash. Principal has 2,500 shares of stock outstanding at a market price of $32 a share. Secondary has 1,600 shares of stock outstanding at a market price of $15 a share. Neither firm has..
The Initial capital outlay is GBP (British Pounds) 20 million on plant and machinery.The plant will produce 60,000 items in year 1, and production will increase at 10% a year up to and including year 4. This is incremental sales.The current price of ..
How much money will be in the account at the end of that time period?
We examined two very important topics in finance this week; Capital Budgeting and Dividend Policy. Critically reflect on the importance of selecting the right projects in which to invest capital. Do we always select those projects that have the highe..
Tax rates are usually stated in mills. Convert a tax rate of 35 mills to percentage terms. calculate the total annual tax liability of the homeowner.
Explain why the impact of credit risk on a matched pair of interest rate swaps tends to be less than that on a matched pair of currency swaps.
what is the after-tax cost of debt in the weighted average cost of capital if the firm's tax rate is 38%?
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