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Mullet technologies whether or not to refund a $75 million, 12 % coupon, 30-year bond issue that was sold 5 years ago. It is amortization $5 million of flotation cost of the 12 % bonds over the issue's 30 year life. Mullet's investment banks could sell a new 25-year issue at an interest rate of 10% in today's market. Neither they nor Mullet's management have anticipate will fall below 10% any time soon, but there is a chance that the interest will increase. A call premium of 12% would require retire old bonds and flotation cost on the new issue amount to $5 million. Mullet's marginal federal-plus state tax rate is 40%. The new bonds would be issued 1 month before the old bonds are called, with proceeds being invested in short term government securities returning 6% annually during the interim period. A. Perform a complete bond refund analysis. What is the bond refunding's NPV ?
Kaiser Industries has bonds on the market making annual payments, with 14 years to maturity, and selling for $1,382.01. At this price, the bonds yield 7.5 percent. What is the coupon rate?
Suppose Cisco Systems pays no dividends but spent 5 billion dollars on share repurchase last year. What stock price does this correspond to?
What is the proper cash flow amount to use as the initial investment in fixed assets when evaluating this project? (Enter your answer in dollars, not millions of dollars, i.e. 1,234,567.)
Address other methods of Analyzing financial statements aside from ratio analysis.
Determine the implications of a change in the return on equity with an increase in debt financing?
Juan Garza invested $35,000 10 years ago at 12 percent, compounded quarterly. How much has he accumulated?
You put $800 into an investment that pays $70 in year 1, $70 in year 2, $190 in year 3 and $680 in year 4. The cost of capital is 9 percent. Calculate the net present value and internal rate of return of the investment
It also has bond debt with a total book value of $300 million that can be sold for a price of $1,000 for each bond's $1,000 face value. What is the Joe Investigation Service's total market value?
If the returns required by investors are 10 percent, 11 percent, and 15 percent for the debt, preferred stock, and common stock, respectively, what is Capital's after-tax WACC? Assume that the firm's marginal tax rate is 40 percent.
Find out the present value of 20-year annuity with the semiannual payments of $500 evaluated at a 14 percent interest rate?
The difference between the cost of funds used to finance an investment and after-tax operating profits is called;
If you can invest the cash flows at 7 percent, how much will you be willing to pay for this perpetuity? (Round to the nearest dollar.)
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