User Account

All Pages

Mesquite corporation has a bond outstanding with a 80

Assignment Help Finance Basics
Reference no: EM13478854

1. Mesquite Corporation has a bond outstanding with a $80 annual interest payment, a market price of $850, and a maturity date in ten years. Please find

a. The coupon rate

b. The current rate

c. The approximate yield to maturity

2. An investor must choose between two $1,000 par value bonds:

Bond A pays $80 annual interest and has a market value of $800. It has 12 years to maturity. Bond B pays $85 annual interest and has a market value of $880. It has 4 years to maturity.

a. Compute the current yield on both bonds.

b. Which bond should he select based on your answer to part a?

c. Compute the approximate yield to maturity on both bonds.

d. Has your answer changed in terms of which bond to select?

3. A 5-year, $1,000 par value, zero-coupon rate bond is to be issued to yield 10%.

a. What should be the initial price of the bond

b. If immediately upon issue, interest rates dropped to 8%, what would be the value of the zero-coupon rate bond?

c. If immediately upon issue, interest rates increased to 12%, what would be the value of the zero-coupon rate bond?

4. Dr. Eveal Industries has the following balance sheet (The firm has a market price of $22 a share):

Dr. Eveal Industries

 

Assets

 

Cash

$110,000

Accounts receivable

$520,000

Fixed assets

$1,370,000

Total assets

$2,000,000

Liabilities and Stockholders Equity

 

Accounts payable

$500,000

Notes payable

$100,000

Total liabilities

$600,000

 

(Capital account)
(Capital account)
(Capital account)

Common stock 100,000 shares @ $4 par Capital in excess of par

Retained earnings

Total equity

Total liabilities and stockholders e ut

 

$400,000
$200,000
$800,000

$1,400,000

$2,000,000

 

 

a. Show the effect on the capital account(s) of a two-for-one stock split.

b. Show the effect on the capital account of a 10 percent stock dividend. (Part b is separate from part a)

c.  Based on the balance in retained earnings, which of the two dividend plans is more restrictive on future cash dividends?

5. Dinocom Inc. earned $250 million last year and paid out 25% of earnings in dividends.

a. By how much did the company's retained earnings increase?

b. With 50 million shares outstanding and a stock price of $60, what was the dividend yield?

6. The shares of Bankston Company sell for $75. The firm has a PIE ratio of 12. Fifty percent of earnings are paid out in dividends. What is the firm's dividend yield?

7. Suppose a Swedish krona is selling for $0.1121 and a MaRan lira is selling for $2.7878. What is the exchange rate (cross rate) of the Swedish krona to the Maltan lira?

8. About three years ago, the following spot and forward rates for the British pound ($/f) were reported:

Spot

$1.525

30-day forward

$1.522

90-day forward

$1.520

180-day forward

$1.514

 

a. Was the British pound selling at a discount or premium in the forward market?

b. What was the 30-day forward premium (or discount)?

c. What was the 90-day forward premium (or discount)?

d. Suppose you executed a 90-day forward contract to exchange 100,000 British pound into U.S. dollars. How many dollars would you get 90 days hence?

Reference no: EM13478854

Questions Cloud

Prepare a 10-minute presentation 10-15 slides not including : prepare a 10-minute presentation 10-15 slides not including title or reference slide on organizational culture and
What are the options for acting evaluate the options by : read the course document on ethics and leadership analysis and application. the ethics and leadership analysis and
Define you as an employee and attributes that companies : define you as an employee and attributes that companies value and expect from their employees explore the attributes of
Your assignment is to select a publicly held company and to : your assignment is to select a publicly held company and to analyze its capital structure applying the theories and
Mesquite corporation has a bond outstanding with a 80 : 1. mesquite corporation has a bond outstanding with a 80 annual interest payment a market price of 850 and a maturity
Explain what other objectives may be important to public : 1 the primary financial objective of financial management is usually taken to be the maximization of shareholder
How is internet pricing different from brick and mortar : 1. ethical standardsa. can a multinational firm adopt varying ethical standards such as with regard to product safety
Engineers create artefacts and processes through design : write an essay of 1000 words including references based on the following title. you must use the template provided on
Explain the relationship between a companys growth : question 1 if common stockholders are the owners of the company why do they have the last claim on assets and a

Reviews

Write a Review

Finance Basics Questions & Answers

  What must the coupon rate be on these bonds

Ashes Divide Corporation has bonds on the market with 18 years to maturity, a YTM of 6.4 percent, and a current price of $1,266.50. The bonds make semiannual payments. What must the coupon rate be on these bonds?

  Construct a pro forma income statement for the first year

Construct a pro forma income statement for the first year and second year for the following assumptions: • Units of Sales in Year 1: 110,000 • Price per Unit: $11.

  Explain why mutual funds are attractive to small investors

Explain why mutual funds are attractive to small investors? How can mutual funds generate returns to their shareholders?

  What is the maximum amount pierre should be willing to pay

Pierre dupont just received a gift from his grandfather. He plans to invest in a five year bond issued by venice corp that pays annual coupons of 5.5 percent. If the current market rate is 7.25 percent, what is the maximum amount pierre should be ..

  Purchasing products of firm

Discuss three situations in which you would not purchase the products of the firm even though it is very socially responsible.

  Which one of the following categories of securities

Which one of the following categories of securities has had the most volatile returns over the period 1926-2007?

  What is amcs share price prior to the share repurchase

AMC Corporation currently has an enterprise value of $350 million and $110 million in excess cash. The firm has 10 million shares outstanding and no debt. Suppose AMC uses its excess cash to repurchase shares. After the share repurchase, news will..

  How much will national geographic pay in income taxes

The old press is being sold for $350,000 and it has a net book value of $75,000. Assume that National Geographic is in the 40% income tax bracket. How much will National Geographic pay in income taxes from the sale?

  If the markets required rate of return is 8 and the

suppose you manage a 5.08 million fund that consists of four stocks with the following

  What is the primary concern an investor should conside

when using the DDM to make an investment move, what is the primary concern an investor should conside at decision time?

  Computing the cost in ten years using average home costs

The average home costs= $275,000 today. How much will it cost in ten years if price rises by 5% each year?

  What is the firm expected rate of return

Preston Inc.'s stock has a 25% chance of producing a 30% return, a 50% chance of producing a 12% return, and a 25% chance of producing a -18% return. What is the firm's expected rate of return?

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!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd