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1. We have a 10%, 25 year bond, which sells for $1100. If the firm has the right to call it back after 16 years at par plus half a years coupon. Compute the YTM and the YTC. Which will the investor attain? Please show work and equation.
2. What is capital budgeting? Discuss why capital budgeting decisions by managers are risky?
3. Discuss the political risk factors, and identify those that could possibly affect our international business. Explain how our cash flow could be affected.
Dismal Outlook is unable to obtain financing for any new projects under any circumstances. This company is faced with: Turner Industries started a new project three months ago. Sales arising from this project are significantly less than anticipated. ..
Suppose that the consensus forecast of security analysts of your favourite company is that earnings next year will be E1 = $5.00 per share. Suppose that the company tends to plow back 50% of its earnings and pay the rest as dividends.
What was the last price of the bond in $. - Calculate annual coupon interest payments. - Calculate current yield of the bond.
Calculate the company's net cash flow.
Gavin Collins plans to borrow $8,000 for five years. The loan will be repaid with a single payment after five years, and the interest on the loan will be computed using the simple interest method at an annual rate of 6 percent. How much will Gavin ha..
The common stock of the P.U.T.T. Corporation has been trading in a narrow price range for the past month, and you are convinced it is going to break far out of that range in the next 3 months. What would be a simple options strategy to exploit your c..
Describe how the Internet has changed advertising and provide examples. Discuss the concept of systemic and non-systemic risk
You purchase a 7 percent $1,000 bond with a term of ten years and reinvest all interest payments. If interest rates rise to 10 percent after you purchase the bond what is the return on your investment in the bond?
One bond has a coupon rate of 7.8%, another a coupon rate of 9.4%. Both bonds pay interest annually, have 7-year maturities, and sell at a yield to maturity of 7.0%. If their yields to maturity next year are still 7.0%, what is the rate of return on ..
Klingon Widgets, Inc., purchased new cloaking machinery three years ago for $6 million. The machinery can be sold to the Romulans today for $5.2 million. Klingon’s current balance sheet shows net fixed assets of $4 million, current liabilities of $77..
What is their nominal yield to maturity? What is their nominal yield to call? What return should investors expect to earn on these bonds?
Compute the yield to maturity. Compute the taxable equivalent yield.
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