Unexpected profits from sale of some land to state for way

Assignment Help Financial Management

Reference no: EM13927954

The president and the board of directors have been talking about ways to use the unexpected profits from the sale of some land to the state for a right of way. One idea that was under consideration at the last meeting was to “call” (or pay off early) up to $1,500,000 of an older DCI bond issue. The older bonds have a face value of $100,000 each and pay 18% in semi-annual installments. They have an early call provision for a 5% premium over face value. The bonds were sold 8 years ago and had a 12-year term. A payment (Number 16) was made last week. These bonds were sold at a premium ($110,000 less $2,500 in selling expenses) in part because of the early call premium. The pre-tax MARR of DCI is 17.5%.

Reference no: EM13927954

Questions Cloud

What is its percentage after-tax cost of debt : Micro Spinoffs Inc. issued 10-year debt a year ago at par value with a coupon rate of 5%, paid annually. Today, the debt is selling at $1,210. If the firm’s tax bracket is 20%, what is its percentage after-tax cost of debt? Assume a face value of $1,..

What is the percentage cost of the preferred stock : Pangbourne Whit church has preferred stock outstanding. The stock pays a dividend of $8 per share, and sells for $40. What is the percentage cost of the preferred stock?

Accounting break-even production quantity for project : The accounting break-even production quantity for a project is 12,320 units. The fixed costs are $187,400 and the contribution margin per unit is $18.10. The fixed assets required for the project will be depreciated on straight-line basis to zero ove..

What is the equivalent monthly interest rate : A couple purchases a home and signed a mortgage for $240000 to be paid in equal monthly installments over 25 years, with interest i^(2) = 0.18. What is the equivalent monthly interest rate i? What are the monthly payments? How much principal is repai..

Unexpected profits from sale of some land to state for way : The president and the board of directors have been talking about ways to use the unexpected profits from the sale of some land to the state for a right of way. One idea that was under consideration at the last meeting was to “call” (or pay off early)..

What is the total interest paid : Suppose that a debt of $2200 with interest at i^(4) = 0.10 is amortized by payments of $500 at the end of each quarter for as long as possible. How many payments are made? What is the last payment? What is the total interest paid?

Law granting trade preferences to imports from island nation : The U.S. law granting trade preferences to imports from the island nations of the Caribbean and Central America is called:

How many years will it take him to pay off the credit card : Your friend currently owes $22,000 on his credit card with and has asked your advice. The credit card charges an APR of 15% monthly compounded. If your friend pays back $275.00 per month how many years will it take him to pay off the credit card (to ..

What was book debt-to-value ratio-market debt-to-value ratio : In 2013 Caterpillar Inc. had about 648 million shares outstanding. Their book value was $27 per share, and the market price was $83.50 per share. The company’s balance sheet shows that the company had $25.7 billion of long-term debt, which was curren..

User Account

All Pages