Markets required yield to maturity on comparable-risk bond

Assignment Help Financial Management
Reference no: EM13976598

The 19-year, $1,000 par value bonds of Waco Industries pay 6 percent interest annually. The market price of the bond is $1,095, and the market's required yield to maturity on a comparable-risk bond is 4 percent.

(a) Compute the bond's yield maturity.

(b) Determine the value of the bond to you given the market's required yield to maturity on a comparable-risk bond?

(c) Should you purchase the bond?

Please show work so I can understand how to do the calculations

Reference no: EM13976598

Questions Cloud

What is the price of share of this common stock : If a large corporation paid a dividend of $3.49 this past year, and there is a growth rate of 3.5%, based upon a 7% rate of return, what is the price of share of this common stock?
What is total return for bond-semiannual coupon payments : Suppose that an investor with a five-year investment horizon is considering purchasing a seven-year 9% (annual rate) coupon bond selling at par. What is the total return for this bond? Assume semiannual coupon payments
How much interest in dollars will the firm pay : Data back-up systems has obtained a $10,000, 90-day bank loan at an annual interest rate of 15% , payable at maturity. (Note: Assume a 365-day year). How much interest in dollars will the firm pay on the 90-day loan? Find the 90-day rate on the loan.
Investor beat stock market and generate a superior return : Could an investor beat the stock market and generate a superior return with companies that have formulated and implemented a blue ocean strategy? Why or why not? Elaborate through at least two concrete examples (use Fortune 500 companies different fr..
Markets required yield to maturity on comparable-risk bond : The 19-year, $1,000 par value bonds of Waco Industries pay 6 percent interest annually. The market price of the bond is $1,095, and the market's required yield to maturity on a comparable-risk bond is 4 percent. Compute the bond's yield maturity. Det..
What are lindseys discretionary financing needs : Lindsey insurance Co. has current sales of $10 million and predicts net year’s sales will grow to $14 million. Current assets are #3 million and fixed assets are $4 million. What are Lindsey’s total financing needs for the upcoming year? given the ab..
Net present value of undertaking the certification program : Natasha is 30 years old and currently employed as a Tier 2 field service representative for a telephony corporation and earns $38,000 a year that she anticipates will grow at 3% per year. What is the present value of the salary differential for compl..
Theologian description of methodology for theology : Each theologian's description of methodology for theology in accordance with the nature of God and God's revelation
Calculate the initial outlay required to fund this project : J.B. Corporation is considering the purchase of equipment that has an invoice price of $450,000. The equipment was recommended by a consulting firm that did an analysis for J. B. Corporation. J. B. paid the consulting firm $12,000 for its report. Cal..

Reviews

Write a Review

Financial Management Questions & Answers

  Calculate expected return and standard deviation

Calculate Expected Return and Standard Deviation (please show how to do this on a calculator using STAT) Based on the following data, calculate the expected return and standard deviation of returns for EACH stock.

  How much did the firm pay in annual interest

Green Tea House has a 35 percent tax rate and an interest tax shield valued at $6,728 for the year. How much did the firm pay in annual interest?

  Market value of chief corporation on the date of declaration

On October 1, 2013, Chief Corporation declared and issued a 14% stock dividend. Before this date, Chief had 89,000 shares of $5 par common stock outstanding. The market value of Chief Corporation on the date of declaration was $10 per share. As a res..

  Bonds on the market making annual payments

Page Enterprises has bonds on the market making annual payments with seven years to maturity, and selling for $950. At this price, the bonds yield 6.00 percent. What must the coupon rate be on the bonds?

  What is the equivalent amount of new income

A company is considering getting involved in electronic commerce. A modest e-commerce package is available for $29,000. If the company wants to recover cost in 2 years, what is the equivalent amount of new income that must be received every 6 months ..

  Calculate the cost of purchasing the equipment

Andiola Corporation is evaluating whether to lease or purchase equipment. Its tax rate is 30 percent. If the company purchases the equipment for $1,500,000 it will depreciate it over 5 years, using straight-line depreciation.

  What is value of bond that matures

What is the value of a bond that matures in 17 years makes an annual coupon payment of $50 and has a par value of $1,000. Assume a required rate of return of 6%

  Why profitability ratios at small banks typically differ

Explain how and why profitability ratios at small banks typically differ from those at the largest money center banks.

  Home Systems-Does it take marios to sell its inventory

Mario's Home Systems has sales of $2,750, costs of goods sold of $2,090, inventory of $490, and accounts receivable of $423. How many days, on average, does it take Mario's to sell its inventory?

  1 the tiger company has an opportunity to make an

1 the tiger company has an opportunity to make an investment with the following estimated after tax cash flows-year

  You are a coffee anticipating the purchase of 82000 pounds

you are a coffee anticipating the purchase of 82000 pounds of coffee in three months. you are concerned that the price

  What is the discounted payback period

A firm is evaluating a project which will cost $10,269 today and provide cash flows in years 1, 2, and 3 of $7,560, $3,286, $3,268 and, respectively. The firm’s discount rate is 8%? (Assume CFs is received at the end of each year). What is the discou..

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