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

  Impact of the global economic crisis on business environment

This paper reviews the article of ‘the impact of the global economic crisis on the business environment' that is written by Roman & Sargu (2011).

  Explain the short and the long-run effects on real output

Explain the short and the long-run effects on real output, price, and unemployment

  Examine the requirements for measuring assets

Examine the needs for measuring assets at fair value in accounting standards

  Financial analysis report driven by rigorous ratio analysis

Financial analysis report driven by rigorous ratio analysis

  Calculate the value of the merged company

Calculate the value of the merged company, the gains (losses) to each group of shareholders, NPV of the deal under different payment methods. Synergy remains the same regardless of payment method.

  Stock market project

Select five companies for the purpose of tracking the stock market, preparing research on the companies, and preparing company reports.

  Write paper on financial analysis and business analysis

Write paper on financial analysis and business analysis

  Intermediate finance

Presence of the taxes increase or decrease the value of the firm

  Average price-earnings ratio

What is the value per share of the company's stock

  Determine the financial consequences

Show by calculation the net present value for the three alternatives (no education, network design certification, mba). Also, according to NPV suggest which alternative you advise your friend to choose

  Prepare a spread sheet model

Prepare a spread sheet model for the client that determines NPV/IRR with and without tax.

  Principles and tools for financial decision-making

Principles and tools for financial decision-making. Analyse the concept of corporate capital structure and compute cost of capital.

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