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As chief financial officer (CFO) of Madison Corp. you observed the price at which your bonds are selling in the market, the coupon on your bonds, and the credit rating on your debt. From this information you determine that your pretax cost of debt in 8.2%, the coupon rate is 9.5%, and the credit rating has improved from an A rating to a AA rating. In addition, Madison is in the 26% tax bracket. What is Madison's after tax cost of debt (round at 2 decimal places - such as 1.45%)
The bonds make semiannual payments. What must the coupon rate be on these bonds?
How much money will you have in savings when you retire in 15 years from now?
What happens to the value of the diversified portfolio if the first two investments are both a total loss?
Identify 2 or 3 advantages to the investor of buying a bond with warrants instead of straight bonds.
Inventory conversion period of 50 days
The company expects sales of 300 million during the currrent year, and it expects sales to grow by 32% next year. What is the inventory forecast for next year? All dollars are in millions.
Charlie Company is expected to grow at an annual rate of 6% indefinitely. The return on similar stocks is currently 11%. Charlie's board of directors declared a dividend of $1.85 yesterday. What should a share of Charlie Company sell for?
You have always dreamed of taking a trip to Machu Pichu. What lump sum do you have to invest today to have the $12,000 needed for the trip in 3 years? Suppose that you can spend the money at 10%.
The risk free rate of return, r RF, is 6%; the required rate of return on the market is 10%; and Upton Company's stock has a beta coefficient of 1.5.
X comapny is planning the pruchase of one of two microfilm cameras, R and S. Both should provide benefits over a 10-year period, and each requires an initial investment of $4,000.
Martin Software has 9.4% coupon bonds on the market with 19 years to maturity. The bonds make semiannual payments and currently sell for 107.5% of par.
Identify the major business and financial risks such as interest rate risk, foreign exchange risk, credit, commodity and operational risks.
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