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Rhyan has owned and operated Antilles Spice, a specialty restaurant in Boca Raton, for the past three years. Business has been good and he wants to expand into Fort Lauderdale and Miami. He develops a new detailed business plan and approaches two local investors about financing the expansion. These investors are not interested in equity ownership in restaurant businesses, but they agree to loan Rhyan $250,000, with the two new locations pledged as collateral. The investors realize that cash flow is important during the formative stages of new restaurants, so they structure the terms of the loan to help Rhyan with his cash flow. The annual interest rate will be 7.5% and the interest will compound monthly over the 4-year term of the loan. However, there will be no monthly payments; the note will be a so-called "balloon" note with the full amount of principal and interest due at the end of four years. In planning his cash flow for Antilles Spice, how much money will Rhyan need to set aside for the retirement of this indebtedness at the end four years?
Discuss the concept of investing in bonds. With a definition of what kind of investment a bond is, how bonds are bought and sold, how bond prices are affected by interest rate fluctuations.
Tom Cruise Lines, Inc., issued bonds five years ago at $1,000 per bond. These bonds had a 20-year life when issued and the annual interest payment was then 13 percent.
You are faced with the last days of a computer conversion and you are receiving calls that people have paid their bills, yet were not being credited.
Calculate the modified duration of the 4-yr zero coupon bond.
What is the total return on your portfolio given the following adjusted closing prices on each stock (please enter the answer in percent format
Rochester, Inc. has 7,500 shares of stock outstanding at a market price of $42 each and earnings per share of $1.90. The firm has decided to repurchase $63,000 worth of stock. What will the PE ratio be after the repurchase, all else held constant?
What is the WACC for the last dollar raised to complete the expansion? Round your answer to two decimal places.
Describe how bond convexity affects the theoretical linear price-yield relationship of bonds. - What are the implications of bond convexity for estimating changes in bond prices?
1. The cost of a manufactured product generally consists of which of the following costs?
What is the maximum possible gain?
ABC, Inc. has a potential capital budgeting project with a growth option. The NPV of the project with the growth option is $1,631 and without the growth option is $472. What is the value of this option to ABC?
Made-It common stock currently sells for $22.50 per share. The company's executive anticipate a constant growth rate of 10 percent and an end-of-year dividend of $2.
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