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A Ford Motor Co. coupon has a coupon rate of 6.75% and pays annual coupons. The next coupon is due tomorrow and the bond matures 32 years from tomorrow. The yield on the bond issue is 6.45%. At what price should this bond trade today, assuming a face value of $1,000?
The price of the bond today should be-
Valence Electronics has 217 million shares outstanding. It expects earnings at the end of the year of $760 million. Valence pays out 40% of its earnings in total 15% paid out as dividends and 25% used to repurchase shares. If Valence's earnings are e..
Xerox wants to issue bonds in order to take advantage of historically low interest rates. The bonds will have a 2.5% coupon rate (interest paid semiannually) and a maturity of 25 years. If market interest rates are at 3% at the time the bonds are iss..
Atlantis Fisheries issues zero coupon bonds on the market at a price of $501 per bond. These are callable in 10 years at a call price of $560. Using semi annual compounding, what is the yield to call for these bonds?
A mining company is considering a new project. Because the mine has received a permit, the project would be legal; but it would cause significant harm to a nearby river. Calculate the NPV and IRR with mitigation. Calculate the NPV and IRR without mit..
A company just paid a dividend of 2 NOK per share. The share price before the dividend payment was 105 and the price after the payment is 102.5. The capital gain tax rate is 30%. Assuming there are no-arbitrage opportunities, what is the tax rate on ..
Marcia executed a mortgage of Blackacre to secure her indebtedness to Ajax Savings and Loan Association in the amount of $125,000. Later, Marcia sold Blackacre to Morton. The deed contained the following provision: “This deed is subject to the mortga..
The current price of Yusof Corporation stock is RM26.50 per share. Earnings next year should be RM2 per share and it should pay a RM1 dividend. The P/E multiple is 15 times on average. What price would you expect for Yusof Corporation’s stock in the ..
How much debt is outstanding in a firm that has calculated the present value of a perpetual tax shield to be $300,000 if the tax rate is 35% and the debt carries a 10% rate of return?
A company has issues one- and two- year bonds providing 8% coupons, payable annually. The yields on the bonds (expressed with continuous compounding) are 6% and 6.6%, respectively. Risk-free rats are 4.5% for all maturities. The recovery rate is 35%...
Ted and Alice Hansel have a son who will begin college 10 years from today. School expenses of $37,000 will need to be paid at the beginning of each of the four years that their son plans to attend college. What is the duration of this liability to t..
The Green Tomato purchased a parcel of land six years ago for $299,500. At that time, the firm invested $64,000 grading the site so that it would be usable. Since the firm wasn't ready to use the site itself at that time, it decided to lease the land..
A couple will retire in 50 years; they plan to spend about $22,000 a year in retirement, which should last about 25 years. They believe that they can earn 8% interest on retirement savings. But now assume that the inflation rate over the next 50 year..
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