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A firm is considering whether to issue the following securities:
i) a 7-year note at par with a coupon of 6.125% paid semi-annually and fees equal to .65% of par to be paid up front
ii) a 7-year zero coupon bond at a price of 65.5% of par with up front fees of .50% of par (the bond can be redeemed by the firm at par at any time)
iii. a 7-year Eurobond issued at 99.875% of par with an annual coupon of 6% and fees of .875% of par.
Fees reduce the proceeds to the issuer on the issuance date. Which financing alternative is best? Calculate borrowing costs and discuss other factors that might influence your decision (e.g. does the call feature of the zero coupon bond affect the decision?)
What is the value of firm L according to MM's proposition 1 with corporate taxes and micky is the holder of $30,000 worth of L's stock. What rate of return can he expect, assuming a dividend payout of 100%.
Explain the Target Costing Diagnostic Tool developed by CAM-I, and discuss some possible applications of the Tool to business and/or non-business organizations
You own stock in XYZ Company which operates in the pharmaceutical industry. This company is on the verge of a drug that can revolutionize cancer treatment and this information has just been released to the public. The stock price appreciated signific..
What is the value today of a security that promises to pay $1,000 in one quarter, with payments increasing at 1% per quarter thereafter? Payments are made each quarter forever. Our opportunity cost of capital is 12% per annum.
ABC Inc. has sales of $251,688, costs of $112,324, depreciation expense of $21,391, and interest paid of $49,571. The tax rate is 37 percent. How much net income did the firm earn for the period?
In what ways is the estimated net present value of this project more uncertain than that of a similar project in a more developed European country?
horizontal analysis of income statement and balance sheetprepare a three-year horizontal analysis of the income
Talbot Enterprises recently reported an EBITDA of $7.0 million and net income of $2.45 million. It had $2.03 million of interest expense, and its corporate tax rate was 30%. What was its charge for depreciation and amortization? Enter your answer in ..
The management team of a cable company estimates that the cost of installing new cable in a certain area of the city is $17 million. However, they will receive a cash flow of $1.4 million per year indefinitely. The net present value (NPV) of this inv..
Your company matches 50 percent of the first 5 percent of your earnings. You expect the fund to yield 8 percent next year. If you are currently in the 31 percent tax bracket. a. How many dollars did you invest out of your salary in your 401(k) plan t..
A variety of financial ratios and measures are provided about one of the auto companies and its stock. These are incomplete, however, so some additional information will have to be computed.
Consider an investment that will pay in total dividends $100,000 in year one, $300,000 in year two and $600,000 in year three. After the final dividend is made the shares become worthless. Assume there are 25,000 shares being issued and the benchmark..
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