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X Corp issues a bond on March 1, 2014 with a maturity date of February 28, 2024. The issue price and redemption amount is 100,000. The bonds have a 5% coupon. On March 1, 2019, C purchases the bond with a redemption amount of $10,000 for $1,000. The drop in price is due solely to the deterioration of X Corp’s credit rating. C sells the bond on March 2, 2021 for $2,500 and claims that the entire gain is long term capital gain.
Assume you are representing the client with respect to his audit by the IRS and the IRS is claiming that the $2,500 is not capital gain. What convincing argument can you make that the gain should be treated as capital?
Consider a non-dividend-paying stock whose current price S(0) = S is $60. calculate the call option price after three months.
A corporation sold a fixed asset for $100,000. Which of the following is an area of career opportunities in managerial finance?
Compare risk pooling, risk sharing and the risk of long-term investments. Describe a beneficial scenario for each term.
Review your answers to questions 1 to 5 and consider what the influences have been on the strategies followed by google and suggested by you,note your response should consider the complexity and ambiguity of strategy decision making
Given the following information for O'Hara Marine Co., calculate the depreciation expense: sales = $42,000; costs = $21,300; addition to retained earnings = $7,250; dividends paid = $1,200; interest expense = $5,300; tax rate = 35 percent.
A firm issues $200 million straight bonds at an original issue discount of 7.5% and a coupon rate of 7%. The firm pays fees of 2.5% on the face value of the bonds. What is the net proceeds from the debt issue?
The? 1-year interest rate is 7%.The? 1-year interest rate expected in 1 year is 5 %. The? 1-year interest rate expected in 2 years is 7 % What are the? 2-year and? 3-year interest rates predicted by the pure expectations? theory?
ACME has hired you to study the feasibility of a new toy that requires a $5 million initial investment. ACME expects annual cash flows of $880,000 for the next 10 years. The discount rate is 10%. a. What is the NPV of the new toy? b. After one year, ..
What is the best estimate of the firm's corporate cost of capital?
Generate a graph and use it to identify the approximate breakeven stock price. Determine the maximum and minimum profits.
If interest rates suddenly rise by 3 percent, what is the percentage price change of these bonds?
Assume Gillette Corporation will pay an annual dividend of $ 0.65 one year from now. Analysts expect this dividend to grow at 12.0 % per year thereafter until the 55th year.? Thereafter, growth will level off at 2.0 % per year. According to the? divi..
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