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Bob Technologies is considering whether or not to refund a $70 million, 10% coupon, 30-year bond issue that was sold 5 years ago. It is amortizing $4 million of flotation costs on the 10% bends over the issue's 30-year life. Bob's investment banks have indicated that the company could see a new 25-year issue at an interest rate of 8% in today's market. Neither they nor Bob's management anticipated that interest rates will fall below 8% any time soon, but there is a chance that rates will increase. A call premium of 10% would be required to retire the old bonds, and flotation cots on the new issue would amount to $5 million. Bob's marginal federal plus-state tax rate is 40%. Conduct a complete bind refunding analysis. What is the bond refunding's NPV? Should they refund the bonds?
They expect to see their dividend grow at a twenty percent rate for the next two years and then level out at a continuous six percent growth rate. City Food's required rate of return is twelve percent. What is the most you would pay for City Foods..
Determine why are financial ratios used to assess a corporation's financial performance? Why are sales reports, profits, debts, or current liability reports insufficient?
The Anderson Pipe Co. just paid an annual dividend of $3.75 and is expected to grow at 8% for the forseeable future. Harley Bevins generally demands a return of 9% when he invests in companies similar to Anderson.
answers the two following questions with a minumim of 20 words1if you were an investment banker how would you determine
Your corporation has an opportunity to make the major investment in China of $100 million to make offshore manufacturing facility.
The company is considering two alternatives to raise the $2 million: (1) sell common stock at $10 per share, or (2) Sell bonds at a 10 percent coupon, each $1,000 bond carrying 50 warrants to buy common stock at $15 per share.
Suppose you purchase a 10-year bond with 6% annual coupons. You hold the bond for four years, and sell it immediately after receiving the fourth coupon. If the bond’s yield to maturity was 5% when you purchased and sold the bond
the environmental protection agency of a county would like to preserve a piece of land as a wilderness area. the
Romeo & Juliette are competitors in selling college finance textbooks. The separate capital structures of each corporation are as follows:
Assume nominal rate is 14.62% and inflation rate is 5.49%. Solve for the real rate.
Similarities as well as Differences between the goal in throughput costing and Activity Based costing
this week we are studying the statement of cash flows.nbsp operating cash flow represents the cash that flows in and
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