Perpetual and callable bond issues outstanding

Assignment Help Financial Management

Reference no: EM131913267

Company X has two perpetual and callable bond issues outstanding (A and B) with the following characteristics below. It can issue a new bond (with a lower coupon rate) and use the proceeds to pay back either bond. Which one should it refund? A / B / both / neither?

A. Coupon Rate 7%, Issue Size $125 million, Call Premium 7.5%, Cost to refund $11.5 million, Current YTM 6.25%

B. Coupon Rate 8%, Issue Size $132 million, Call Premium 8.5%, Cost to refund $13 million, Current YTM 7.1%

Reference no: EM131913267

Questions Cloud

Difference between common stock and bonds : Which of the following is a difference between common stock and bonds?

Additional visits per day would be required to break even : How many additional visits per day would be required to break even assuming that the new marketing program is undertaken?

How much should he save each month : Zach wants to help pay for his kid's college. If the current tuition cost is $24,000 a year, how much should he save each month?

How much would they need to save each month : Gloria is preparing to go to college in 8 years. How much would they need to save each month?

Perpetual and callable bond issues outstanding : Company X has two perpetual and callable bond issues outstanding (A and B)

What is the terminal cash flow for this project : You decide to sell it at the end of year 2 for $65,000. Your tax rate is 25%. You also had an addition of $7,500 in working capital.

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

Forecast the additional funds carlsbad will need : The firm decides to pay all suppliers on delivery, rather than after a 30-day delay, to take advantage of discounts for rapid payment.

Determine what is the current price of the bond : 16 years ago, Blue Lake Corp. issued 30 year to maturity zero-coupon bonds with a par value of $5,000.

User Account

All Pages