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(TCO D) Oxford Corp. is considering refunding a $30,000,000, annual payment, 12% coupon, 30-year bond issue that was issued 5 years ago. It has been amortizing $2 million of flotation costs on these bonds over their 30-year life. The company could sell a new issue of 25-year bonds at an annual interest rate of 10% in today's market. A call premium of 12% would be required to retire the old bonds, and flotation costs on the new issue would amount to $2 million. Oxford's marginal tax rate is 30%. The new bonds would be issued when the old bonds are called. What is the required after-tax refunding investment outlay, that is, the cash outlay at the time of the refunding?
A Corporation bought land for $80,000 cash. Real estate brokers' commission was $5,000 and $7,000 was spent for demolishing an old building on land before construction of new building could start.
Evaluate the firm's current stock price, growth model solve for the firm's current stock price
(Monthly compounding) If you bought a $1,000 face value CD which matured in nine months, and which was advertised as paying 9% annual interest, compounded monthly, how much would you receive if you cashed in your CD at maturity?
You borrow $70,000; the annual loan payments are $8,690.06 for 30 years. What interest rate are you being charged? Round your answer to two decimal places.
The market price of a security is $55. Its expected rate of return is 9.26%. The risk-free rate is 4.26%, and the market risk premium is 5.26%. Assume the stock is expected to pay a constant dividend in perpetuity.
Discuss the major capital budgeting methods used by corporations to evaluate projects. Why do many corporations continue to use the payback period method? Which method do you prefer? Explain why you prefer this method.
what annual payments should be made so that both forms of payment are equivalent?
Suppose you expect a share of stock to pay dividends of $1.00, $1.25, and $1.50 in each of next three years. You believe the stock will sell for $20 at the end of third year
Abby Lockheart, a quality control supervisor for Intensive care, Corporation, is concerned about an rise in distribution costs per unit from $3 to $3.27 over the last 3 years.
Describe Capital budgeting involves calculation of modified internal rate of return
Determine the effects on the after-tax profits and cash flow, if sales increase from $10.5 million to $11.8 million.
Your corporation has a marginal tax rate of 35% and has purchased preferred stock in another company. The before-tax dividend yield on the preferred stock is 12%. What is the company's after-tax return on the preferred, assuming a 70% dividend exc..
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