Firm specializing in engineering components

Assignment Help Financial Management

Reference no: EM131983892

Ramblin Wreck is a firm specializing in engineering components. The firm is publicly traded and is considering the following project: The project will last 5.00 years with an annual cash flow of $40.00 million. The project will require an initial investment of $140.00 million The firm must determine the cost of capital to evaluate the project. (The project is within the firm’s normal activities) Ramblin Wreck, Inc. Financial Data:

STOCK DATA: BOND DATA:

Current Price Per Share $29.00 Current Price Per Bond $921.00

# of Shares 2.00 million # of bonds 20,000.00

Book Value $50 million Annual Coupon Rate 8.00%

Face Value Per Bond $1,000

Maturity 10 years

The risk free rate in the economy is currently 2.00%, while investors have a market risk premium of 6.00%. Ramblin Wreck, Inc. has a beta of 1.46. The tax rate is 36.00%. What is the yield to maturity on Ramblin Wreck, Inc. bonds?

Reference no: EM131983892

Questions Cloud

Determine the cost of capital to evaluate the project : The firm must determine the cost of capital to evaluate the project.

What is the no-arbitrage one-year forward rate : If interest rates are 5.375 percent APR in the U.S. and 2.148 percent APR in the U.K., what is the no-arbitrage 1-year forward rate?

What is the euro-yen cross rate : If the euro interest rate is 5.15% and the yen interest rate is 4.95%, what is the euro-yen cross rate?

Consider the options separately and add the net profit : what is your overall net position (net profit) if the spot rate rises to $1.2940/? (Hint, consider the options separately and add the net proft).

Firm specializing in engineering components : Ramblin Wreck is a firm specializing in engineering components. What is the yield to maturity on Ramblin Wreck, Inc. bonds?

What is the percentage of equity : The project has the same risk as the firm overall and will earn $12.00 million per year for 8.00 years. What is the percentage of equity used by McCann Catching

What is the NPV of the expansion : The project has the same risk as the firm overall and will earn $11.00 million per year for 8.00 years. What is the NPV of the expansion?

What is the value of martell mining stock : If Do= $5 and rs=15%, what is the value of Martell Mining’s stock?

Bond outstanding-what is the yield to maturity of bond : A Japanese company has a bond outstanding that sells for 93 percent of its ¥100,000 par value. What is the yield to maturity of this bond?

User Account

All Pages