User Account

All Pages

Find the effective rate on the loan

Assignment Help Corporate Finance
Reference no: EM13195224

1. During the course of your education, you have borrowed $65,000 in student loans. You plan to make monthly payments in order to repay the debt. The interest rate is fixed at 6.8% APR (compounding is monthly).

a. If the loan is for 10 years, find the monthly payment.

b. Right after your 38th payment, you get a huge bonus and decide to pay off the loan. How much do you still owe?

c. Find the effective rate on the loan.

2. Starbucks has one debt issue outstanding. The debt matures on August 15, 2017, and has a 6.25% coupon. Coupons are paid semiannually. The bond is priced to yield 1.61% compound semiannually. The bond has a face value of $1000. SHOW YOUR WORK

a. Estimate the price of the bond on February 15, 2013, immediately after that coupon is paid.

b. You buy the bond on February 15, 2013 for your estimated price from part a. You sell the bond 1 year later for $1160. What was your return? Why is it different from the original yield to maturity? Assume you collect 2 coupon payments.

3. You have the following information for Starbucks: Current EPS is $1.79. The current dividend is $.68 per share. The return on equity is 24%. The current price is $49.22. Hint: Get the payout rate.

a. Use the dividend discount model (also known as the constant growth model) to estimate the return for Starbucks.

b. Assuming your answer to part a. is correct, estimate the present value of the growth opportunities (PVGO).

Reference no: EM13195224

Questions Cloud

What are the page numbers : At one place in a text book, the procuct of the page numbers on facing pages is 930. What are the page numbers?
Calculate free cash flows and find internal rate of return : Calculate the free cash flows for time 0 through time 5 and calculate the net present value (NPV) for a 12% cost of capital and find the internal rate of return (IRR).
What is the return on the preferred stock : what is the return on the preferred stock? HINT: This is just like a bond, but the face value is 25. For the problem, you can assume the dividends are annual.
State amounts of reactant completely react to form products : For the reaction shown, calculate how many grams of each product form when the following amounts of reactant completely react to form products. Assume that there is more than enough of the other reactant.
Find the effective rate on the loan : Right after your 38th payment, you get a huge bonus and decide to pay off the loan. How much do you still owe and find the effective rate on the loan.
State how many grams of khp are needed to neutralize : How many grams of KHP are needed to neutralize 54.63 mL of a 0.1051 M NaOH solution?
Find the probability that everyone gets back his or her own : You and six friends play a game where each person writes down his or her name on a scrap of paper, and the names are randomly distributed back to each person. Find the probability that everyone gets back his or her own name.
Compute the ph of the resulting solution : the titration of 40.0ml of 0.200M HONH2 (Kb=1.1 x 10-3) by 0.100 M HNO2. Calculate the pH of the resulting solution after the following volumes of HNO3 have been added
How much should they be willing to pay for this policy : for the woman. They decide to take out a life insurance policy that will pay $10,000 if either one dies during the next 5 years and $15,000 if both die during that time. How much should they be willing to pay for this policy? (Assume that their li..

Reviews

Write a Review

Corporate Finance Questions & Answers

  Calculate the weighted average cost of capital

Calculate the weighted average cost of capital and one thousand bonds were issued five years ago at a coupon rate of 11%. They had 20-year terms and $1,000 face values. They are now selling to yield 9%. The tax rate is 37%

  Budgeting perspectives from the real world

Budgeting is an important section of an management planning. Using budgeting, every part of an management structure can be identified for decision making & controls.

  Calculate the cash dividend to be paid in 2008

Calculate the cash dividend to be paid in 2008 under each of the three proposals and Maintain the dividend payout ration of 2007

  Retirement and estate planning

Determine when you should start to think about retirement & real estate planning and you begin taking action? Explain your answer.

  Calculate the fair value of the warrant

Quoit Inc issued preferred stock with detachable common stock warrants. The issue price exceeded the sum of warrants fair value and the preferred stocks par value.

  Make adjusting entries

Xerox company accounts officers found that significant errors have been made in valuation of inventory and are worried that it might have significant impact on net income and EPS.

  Country risk assessment

You are employed at McDonalds Company. You want to do a Country Risk Assessment for Iran for the current year to decide whether you should operate a Franchise there.

  Find the expected market price after repurchase

Multiple choice questions on Market price and Stocks - Find the expected market price after repurchase?

  Create journal entries to record transactions

A corporation's only treasury stock transactions for current year follow; 1,000 shares of its common stock were purchased on June 1st for $40,000 $40 each share.

  Find the yield on treasury note

The real risk-free rate is 2.5%. Inflation is expected to be 2% this year, 2.5% next year, and 3% thereafter. The maturity risk premium is .07

  Find the best ways to diversify a portfolio

Discuss the benefits and limitations of portfolio diversification and explain how risk is assessed and what methods are most appropriate for measuring systematic & unsystematic risks.

  Recalculate the adjusted present value of the project

chance that financial distress would result in a loss of 80% and 40%, respectively, of the project"s value. Recalculate the adjusted present value of the project.

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!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

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