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The Sunbelt Corporation has $40 millions of bonds outstanding that were issued at a coupon rate of 12(7/8) percent seven years ago. The interest rate has fallen to 12 percent. Mr. Health, the vice president of finance, does not expect rates to fall any further. The bonds have 18 years left to maturity, and Mr. Health would like to refund the bonds with a new issue of equal amount also having 18 years to maturity. The Sunbelt Corporation has s tax rate of 36 percent. The underwriting cost on the old issue was 2.5 percent of the total bond value. The original bond indenture contained a five-year protection against a call, with an 8 percent call premium starting in the sixth year and scheduled to decline by one-half percent each year thereafter (consider the bond to be seven years olds for purpose of computing the premium). Assume the discount rate is equal to the aftertax of new debt rounded up to the nearest whole number. Should the Sunbelt Corporation refund the old issue?
Calculate the Profit margin and Inventory turnover
CathFoods will release a new range of candies which contain anti-oxidants. New equipment to manufacture the candy will cost $2 million, which will be depreciated by straight-line depreciation over five years. what are the incremental earnings in the ..
The term of an investment can be described as either. The principal differences between capital markets and money markets are that.
What is the NAL of the lease from the lessor's viewpoint?
Trust and leadership go hand and hand in an organization. You cannot have effective leadership if people do not trust one another. The following attachment is developed by a consultant I have worked with Rob Fleischer. This list of signs provides can..
Grace is waiting in her office to meet Joseph, the new sales representative for Powerslam shoe company. Joseph arrives promptly and Grace notices he is well-dressed, sounds intelligent, and has a firm handshake. Joseph immediately inquires about what..
Nanotech, Inc., has a bond issue maturing in seven years that is paying a coupon rate of 7.5 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 6.0 perc..
What is the weighted average cost of capital? What is the NPV of the proposed project (Think about what is appropriate discount rate)?
Demarius owns investment A and 1 share of stock B. The total value of his holdings is 2,619.1 dollars. Investment A is expected to pay annual cash flows to Demarius of 350 dollars per year with the first annual cash flow expected later today and the ..
Discuss the advantages and disadvantages of corporate debt. Discuss preferred stock.
An individual is planning to invest in an insurance company product. The product will pay $15,000 at the end of this year. Thereafter, the payments will grow annually at a 3 percent rate forever. The individual will be able to invest his cash flows a..
Managers in cost center responsibility centers are responsible for controlling both costs and revenues
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