Find what factors would influence mullet decision to refund

Assignment Help Managerial Accounting
Reference no: EM132546447

Mbullet Technologiesis considering whether or not to refund a $225 million, 13% coupon, 30 year bond issue that was sold 5 years ago. It is amortizing $6 million of flotation costs on the 13% bonds over the issuer's 30 year life. Muller's investment banks have indicated that the company could sell a new 25 year issue at an interest rate of 10% in today's market. Neither they or Mullet's management anticipate that interest rates will fall below 10% any time soon, but there is a chance that rates will increase. A call premium of 13% would be required to retire the old bonds, and floatatiin costs on the new issue would amount to $4 million. Mullet's marginal federal-plus-state tax rate is 40%. The new bonds would be issued 1 month before the old bonds are called, with the proceeds being invested in short term government securities returning 6% annually dur8the interim period.

Question A. Conduct a complete bond refunding analysis. What is the bond refunding 's NPV? Do not round intermediate calculations. Round your answer to the nearest cent.

Question B. What factors would influence Mullet's decision to refund now rather than later?

Reference no: EM132546447

Questions Cloud

What budget is needed to prepare the direct labor budget : What budget is needed to prepare the direct labor budget? General and Administrative expense budget/ Production budget/ Direct labor budget
Calculate Stan net tax payable or refundable for tax : Question - Superannuation lump sum, low cap amount. Calculate Stan's net tax payable or refundable for the 2017/18 tax year
Which asset performed better over the 8-year period : The bank also invested in Asset B: $3,000,000 at 5.3% p.a. compounded daily.
Great recession financial crisis : Was the Great Recession Financial Crisis a liquidity issue or solvency issue?
Find what factors would influence mullet decision to refund : Conduct a complete bond refunding analysis. What is the bond refunding 's NPV? Do not round intermediate calculations. Round your answer.
Delivery of public health services : You think is one of important factors that influences the relationship between public and private entities involved in the delivery of public health services
What are the three factors of the fraud triangle : Question - What are the three factors of the "Fraud Triangle"? Do you agree with these factors? Would you add any other components
What is the expected return of portfolio : You have a portfolio with the following. What is the expected return of your portfolio?
Calculate the minimum price firm would be prepared to charge : Calculate the minimum price the firm would be prepared to charge. A firm has excess capacity, and has received an order for 50000 units

Reviews

Write a Review

Managerial Accounting Questions & Answers

  How april the company will need to borrow

Cash disbursements during the month are expected to total $64,000. Ignoring interest payments, during April the company will need to borrow

  Estimate the fixed costs per year

Use account analysis to estimate the fixed costs per year, and the variable cost per unit. Paragon Company would like to estimate production costs

  What is budgeting and what is its role

Outline the effect of 'perspective' on the development of a conceptual framework for financial accounting. Give an example of how a difference in perspective can inform development of accounting standards within such a framework.

  Calculate the cost of factory overhead items

You are required to calculate the cost of factory overhead items given above at 80,000 units of production.

  Capital investments might affect profitability

What are some of the ways in which capital investments might affect profitability?

  Calculate total variance and time variance for the project

Calculate the total variance and time variance for the project and what is the cost variance of the project - What is the schedule variance of the project?

  Answer each of jordan questions using the data given above

Answer each of Jordan's questions using the data given above. In each case, explain how you arrived at your answer.

  How many patient days must mondou average each month

Refer to the original data in the problem. How many patient days must Mondou average each month to earn a target profit of $120,000 per? month?

  Build journal entries to record the transactions

Of this amount, $46,000 is classified as indirect labor and the remainder as direct. Prepare journal entries to record these transactions.

  Calculate the cost of unloading

Calculate the cost of unloading. Calculate the cost of counting. Calculate the cost of inspection. The receiving department of Owen has three activities

  What was the actual rate paid per direct labor-hour

What was the actual rate paid per direct labor-hour? How much actual variable manufacturing overhead cost was incurred during the period?

  What are some day to day items you have encountered

On the cash flow side, operating cash flow is also one of the most important indicators - What are some day to day items you have encountered

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!

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