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1. A ten-year bond is issued with 10% coupon and the discount rate is 12%. After a single year, interest rates go up two percent to 14%. What should happen to your holding period return over that single year?
2. How do changes in the market interest rate affect business spending and consumer spending?
3. Ryan Gray, a student at State College, has a balance of $410 on his retail charge card; if the store levies a finance charge of 19 percent per year, how much monthly interest will be added to his account? Assume that the balance is computed by the average daily balance method. Round the answer to 2 decimal places.
$___________
Assume that the firm pays no taxes and that debt finance has no impact on firm value.
Salt Foods purchases twenty $1,000, 6%, 10-year bonds issued by Pretzelmania, Inc., for $21,559 on January 1. The market interest rate for bonds of similar risk and maturity is 5%. Salt Foods receives interest semiannually on June 30 and December 31.
ABC Corp. currently has a bond outstanding that provides 7.88 percent yield. What is the fair price of the bond?
Strudler Real Estate, Inc., a construction firm financed by both debt and equity, is undertaking a new project. If the project is successful, the value of the firm in one year will be $320 million, but if the project is a failure, the firm will be wo..
Assume that stocks in this economy are priced according to CAPM. Is your current portfolio efficient? Explain.
Who does the clientele effect relate to the corporate check and balance? Florence transferred $300,000 to an irrevocable trust for her two children. She granted them a noncumulative right to withdraw the greater of $5,000 or 5% of trust assets each y..
It had $2.0 million of interest expense, and its corporate tax rate was 35%. What was its charge for depreciation and amortization?
Assume that the YTM remains the same for the next three years, what will be the price of the bond 3 years from today?
Discuss the advantages and disadvantages of stock-for-stock versus cash-for-stock transactions from the viewpoint of acquired and acquiring firm shareholders.
Calculate the value of the firm. What is the WACC for the firm with its new capital structure? What is the WACC for the firm with its new capital structure?
What is the future value of the cash flow stream?
Computing Present Values of Single Amounts and Annuities
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