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Olympic Sports has two issues of debt outstanding. One is a 8% coupon bond with a face value of $21 million, a maturity of 10 years, and a yield to maturity of 9%. The coupons are paid annually. The other bond issue has a maturity of 15 years, with coupons also paid annually, and a coupon rate of 9%. The face value of the issue is $25 million, and the issue sells for 93% of par value. The firm's tax rate is 30%. a. What is the before-tax cost of debt for Olympic? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) b. What is Olympic's after-tax cost of debt? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)
An investment will pay you $88,000 in six years. Assume the appropriate discount rate is 8 percent compounded daily. Required: What is the present value?
You own a portfolio that has $3,300 invested in Stock A and $4,300 invested in Stock B. If the expected returns on these stocks are 11 percent and 14 percent, respectively, what is the expected return on the portfolio?
A company has a wacc equal to 15.00%, a constant and perpetual expected EBITDA equal to 3,100,000 Euro, an unlevered return on equity of 22.53% and it keeps a constant debt-to-equity ratio. If the tax rate is equal to 25% and the assets are fully dep..
State Probability Return: Stock 1 Return: Stock2 Bear .25 -.020 .034 Normal .60 .138 .062 Bull .15 .218 .092 a) Calculate the covariance of return between Stock 1 and Stock 2. Calculate the correlation of return between Stock 1 and Stock 2.
Kiedis Corp. has interest bearing debt with a market value of $66.3 million. The company also has 2.2 million shares that sell for $27 per share. What is the debt–equity ratio for this company based on market values?
Camp manufacturing turns over its inventory 5 times each year, has an average payment period of 35 days, and has an average collection period of 60 days. The firm has annual sales of $3.5 million and cost of goods sold of $2.4 million. Calculate the ..
Portfolio Return Year-to-date, Company X had earned a -3 percent return. During the same time period, Company Y earned 12 percent and Company Z earned 7 percent. If you have a portfolio made up of 50 percent Company X, 30 percent Company Y, and 20 pe..
A finance company has rate-sensitive assets of $20 million and rate-sensitive liabilities of $15 million. Should it be an interest-rate swap buyer (and make fixed-rate payments) or seller (and make variable-rate payments). Explain.
In a transaction for the sale of an auto painting facility, Bright Auto Colors Company tells Custom Cars Corporation that the paints and other supplies on-site are included. The contract says nothing about the supplies on-site, but does state, “This ..
Shapland Inc. has fixed operating costs of $550,000 and variable costs of $35 per unit. If it sells the product for $75 per unit, what is the break-even quantity?
Describe the Federal Reserve (Fed)’s current policy. Is the policy focused on stimulating the economy, reducing inflation, evenly balanced, or other areas? Explain your position.
If you are successful with your financial performance and are paid a bonus based on profitability , which measure should be used? Carefully review the Grading Rubric for the criteria that will be used to evaluate your assignment.
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