Nanotech pay to buy back its current outstanding bonds

Assignment Help Financial Management
Reference no: EM131182549

Nanotech, Inc., has a bond issue maturing in seven years that is paying a coupon rate of 8.5 percent (semiannual payments). Management wants to retire a portion of the issue by buying the securities in the open market. If it can refinance at 7.0 percent, how much will Nanotech pay to buy back its current outstanding bonds? (Round intermediate calculations to 5 decimal places, e.g. 1.25145 and final answer to 2 decimal places, e.g. 15.25.)

Reference no: EM131182549

Questions Cloud

Decides to issue equity to finance the purchase : Stephenson Real Estate Company was founded 25 years ago by the current CEO, Robert Stephenson. The company purchases real estate, including land and buildings, and rents the property to tenants. Construct Stephenson’s market value balance sheet befor..
An investor can design risky portfolio based on two stocks : An investor can design a risky portfolio based on two stocks, A and B. Stock A has an expected return of 21% and a standard deviation of return of 39%. Stock B has an expected return of 14% and a standard deviation of return of 20%. The proportion of..
Consider an oil-wildcatting problem : Consider an oil-wildcatting problem. A decision maker has mineral rights on a piece of land that he believes may have oil underground. There is a 30% chance that the decision maker will strike oil if he drills. What is the maximum amount that the dec..
Considering investing in two alternative production systems : Blanda Incorporated management is considering investing in two alternative production systems. The systems are mutually exclusive, and the cost of the new equipment and the resulting cash flows are shown in the accompanying table. If the firm uses a ..
Nanotech pay to buy back its current outstanding bonds : Nanotech, Inc., has a bond issue maturing in seven years that is paying a coupon rate of 8.5 percent (semiannual payments). Management wants to retire a portion of the issue by buying the securities in the open market. If it can refinance at 7.0 perc..
What is the enterprise value of this business : ProtoSeis Corp. is expected to grow rapidly in the next four years and then have a zero growth rate for the foreseeable future. The firm expects free cash flows of $42.5 million, $64.3 million, $77.1 million and $92 millon over the next four years, a..
What is the book value per share of common stock : A company has 1,000 shareholders who own a total of two million shares of its common stock currently selling at $88.00 per share. The company earned $14,000,000 after taxes. The annual dividend is $0.60 per share. The firm has assets of $132,000,000 ..
What is the forward rate of interest for the second year : The yield to maturity on one-year zero-coupon bonds is 7.1%. The yield to maturity on two-year zero-coupon bonds is 8.1%. What is the forward rate of interest for the second year? If you believe in the expectations hypothesis, what is your best guess..
Correct concerning the rules related to project analysis : Which one of the following is correct concerning the rules related to project analysis?

Reviews

Write a Review

Financial Management Questions & Answers

  Prepare an income statement for krugpark in good form

KrugPark produces a popular beverage called odes us which sells for $97 a case. Last year KrugPark sold 170,000 cases, each of which costs $50 to produce. KrugPark incurred selling and administrative expenses of $670,000 and depreciation expense of $..

  About bringing a new simen johan exhibit to ruffsdale

The Center for Poignant Art (CPA) is thinking about bringing a new Simen Johan exhibit to Ruffsdale. It will cost the Center $30,000 to bring the exhibit to town, an additional $13,000 to install it, and $5,000 for an insurance policy. The manager of..

  Purchase a piece of equipment

The Wilson Landscaping Company can purchase a piece of equipment for $3,600 today. The asset has a two-year life, will produce a cash flow of $600 in the first year and $4,200 in the second year. The interest rate is 15%. Calculate the project's IRR ..

  What must be the beta for the other stock of your portfolio

You own a portfolio invested in a risk free asset and two stocks. If one of the stocks has a beta of 0.5, and the total portfolio is half as risky as the market, what must be the beta for the other stock of your portfolio?

  New chemical vapor depositor in order to make silicon chips

Cameron Industries is purchasing a new chemical vapor depositor in order to make silicon chips. It will cost $6 million to buy the machine and $10,000 to have it delivered and installed. The machine is expected to have a working life of six years. Sa..

  Calculate the payback period for this project

Pappy’s Potato has come up with a new product, the Potato Pet (they are freeze-dried to last longer). Pappy’s paid $131,000 for a marketing survey to determine the viability of the product. It is felt that Potato Pet will generate sales of $586,000 p..

  Net advantage or disadvantage of re-working the keyboards

The Manassas Company has 55 obsolete keyboards that are carried in inventory at a cost of $9,600. If these keyboards are upgraded at a cost of $7,800 they could be sold for $19,100. Alternatively, the keyboards could be sold "as is" for $7,400. What ..

  How much was firms taxable income or earnings before taxes

Frederickson Office Supplies recently reported $12,500 of sales, $7,250 of operating costs other than depreciation, and $1,250 of depreciation. The company had no amortization charges and no non-operating income. It had $8,000 of bonds outstanding th..

  Physical inventory-goods costing

Stallman Company took a physical inventory on December 31 and determined that goods costing $220,490 were on hand. Not included in the physical count were $29,100 of goods purchased from Pelzer Corporation, f.o.b. shipping point, and $26,200 of goods..

  What is the yield to maturity on the bonds

Short Term Inc. has issued zero-coupon bonds that mature in one year. The returns from holding these bonds have a beta of 0.25. There is a chance of 70% that the bonds will pay full value, and a chance of 30% that they will only be worth 60 cents for..

  Concept be used to help management analyze the situation

Changes in sales cause changes in profits. Would the profit change associated with sales changes be larger or smaller if a firm increased its operating leverages? Explain your answer. A firm is about to double its assets to serve its rapidly growing ..

  Calculate the effective interest rate on the loan

A $1 million loan requires five end-of-year equal payments of $284,333. Calculate the effective interest rate on this loan. How much interest (in dollars) is paid over the life of this loan?

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