Financial analyst to appraise the bonds

Assignment Help Financial Management

Reference no: EM131540728

You are called in as a financial analyst to appraise the bonds of Olsen’s Clothing Stores. The $1,000 par value bonds have a quoted annual interest rate of 11 percent, which is paid semiannually. The yield to maturity on the bonds is 12 percent annual interest. There are 10 years to maturity. Use Appendix B and Appendix D for an approximate answer but calculate your final answer using the formula and financial calculator methods.

a. Compute the price of the bonds based on semiannual analysis. (Do not round intermediate calculations. Round your final answer to 2 decimal places.)

b. With 5 years to maturity, if yield to maturity goes down substantially to 10 percent, what will be the new price of the bonds? (Do not round intermediate calculations. Round your final answer to 2 decimal places.)

Reference no: EM131540728

Questions Cloud

Considering new six-year expansion project : Summer Tyme. Inc.. is considering a new 6-year expansion project that requires an initial fixed asset investment of $3, 726 million.

Describe the tax advantages and disadvantages : Explain one relevant tax issue for Patty and describe the tax advantages and disadvantages of what she may be faced with.

Properly resolved and documented in the audit papers : Which member of the audit engagement team has the primary responsibility to ensure that such issues are properly resolved and documented in the audit papers?

Compute the price of the preferred stock : The preferred stock of Denver Savings and Loan pays an annual dividend of $7.65. Compute the price of the preferred stock.

Financial analyst to appraise the bonds : You are called in as a financial analyst to appraise the bonds of Olsen’s Clothing Stores. Compute the price of the bonds based on semiannual analysis.

Compute the current price of the stock : BioScience Inc. will pay a common stock dividend of $3.40 at the end of the year (D1). Compute the current price of the stock (P0).

Discounted payback years should it be accepted or rejected : Discounted payback years Should it be accepted or rejected?

Compute the price of ecology labs common stock : Ecology Labs Inc. will pay a dividend of $5.60 per share in the next 12 months. Compute the price of Ecology Labs' common stock.

Compute the price of bonds based on semiannual analysis : Heather Smith is considering a bond investment in Locklear Airlines. Compute the price of the bonds based on semiannual analysis.

User Account

All Pages