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New York Waste (NYW) is considering refunding a $50,000,000, annual payment, 14 percent coupon, 30-year bond issue that was issued five years ago. It has been amortizing $3 million of flotation costs on these bonds over their 30-year life. The company could sell a new issue of 25-year bonds at an annual interest rate of 11.67 percent in today's market. A call premium of 14 percent would be required to retire the old bonds, and flotation costs on the new issue would amount to $3 million. NYW's marginal tax rate is 40 percent. The new bonds would be issued when the old bonds are called.
The amortization of flotation costs reduces taxes, and thus provides an annual cash flow. What will the net increase or decrease in the annual flotation cost tax savings be if refunding takes place?
a portfolio manager in charge of a portfolio worth 10 million is concerned that the market might decline rapidly during
what is a financial instrument that agrees to pay an equal amount of money per period into the indefinite future.
Corporation X wants to create additional supply development space. The additional space will cost $450,000. The expansion can be financed either by bonds at interest rate of 8 percent, or by selling 40,000 shares of common stock at $20 per share.
What account on the balance sheet would an organization refer to for cash conversion and why?
Project cost $23 million, generate cash flows $14,000,000, $11,750,000 and $6350,000 over next 3 years. Cost of capital is 20%. what is internal rate of return?
Calculate Johnson's debt ratio assuming the firm uses only debt and common equity. Round your answer to two decimal places.
Alexa plans on saving $3,000 a year and expects to earn an annual rate of 10.25 percent. How much will she have in her account at the end of 45 years?
a 10-year bond paying a 10semiannualcoupon is priced at 90.50 od face value. if the current yield changes to 12 what
q. on april 14 1994 bill shaw retired policeman offered to sell thurgood his 1965 mustang convertible for 1000. thur
Computation of yield to maturity and current market price of the bonds and what is the difference in current market prices of the two bonds
a. set up an amortization schedule for a 10000 loan to be repaid in equal installments at the end of each of the next 5
Beta Corp has an ROE of 15%; has just paid a dividend of $1.50; and pays 10% of its earnings out in dividends, and the appropriate discount rate is 20%; what is the current stock price?
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