What is the return on the investment for the coming year

Assignment Help Financial Management
Reference no: EM131063114

Oklahoma Instruments has a bond issue outstanding that pays $70 annually. It has a face value of $1,000, and it will mature in eight years. Similar bonds are priced to yield 6.5%.Assume you have a client who owns the Oklahoma Instruments bond. You expect that the interest rates decrease .5% over the coming year and you advise to sell the Oklahoma Instruments bond exactly one year from now. What will be the sale price and what is the return on the investment for the coming year?  

Reference no: EM131063114

Questions Cloud

What is the price that the buyer should pay for bike shop : A prospective buyer has hired you to value a bike shop. you estimate that in the next 4 years, bike shop will generate free cash flows of $10,000, $14,000, $18,000 and $21,000. Regardless of what answer you find, assume that the terminal value for th..
What is the overall capitalization rate : A property is sold for $200,000. Typical financing terms are an 85% loan with a 10% interest rate over 15 years. If the before-tax cash flow is $2,000, what is the overall capitalization rate?
To assess the value of the firm stock : Imprudential, Inc., has an unfunded pension liability of $573 million that must be paid in 20 years. To assess the value of the firm’s stock, financial analysts want to discount this liability back to the present. If the relevant discount rate is 6.6..
Numerous opportunities to expand in foreign countries : ABC Co. has recognized numerous opportunities to expand in foreign countries and has assessed many foreign markets, including Brazil, Greece, Mexico, Portugal, Singapore, and Thailand. What comparative advantage does ABC have when establishing a stor..
What is the return on the investment for the coming year : Oklahoma Instruments has a bond issue outstanding that pays $70 annually. It has a face value of $1,000, and it will mature in eight years. What will be the sale price and what is the return on the investment for the coming year?
What is the price of the stock at the year : Nu-Platinum is a highly successful mining company. The company just paid a dividend on the stock of $0.60. Business has been growing well over the past few years and is expected to do so at 25% for the next 3 years. If the required return is 20% what..
What is the value of the company stock-zero growth model : The Johnson Company has been very successful in the past five years. Over these years, it paid common stock dividend of $ 3 in the first year, $3.20 in the second year, $4.2 in the third year, $4.5 in the fourth year and its most recent dividend was ..
What is the intrinsic value of stock : Deployment Specialists pays a current (annual) dividend of $1 and is expected to grow at 24% for two years and then at 5% thereafter. If the required return for Deployment Specialists is 9.5%, what is the intrinsic value of Deployment Specialists sto..
What are the industry dynamics : For this individual project you will play the role of an Investment Banker and analyze two companies in the same industry - Staples and Office Depot. You will have to make recommendations to managements of both companies in terms of optimizing their ..

Reviews

Write a Review

Financial Management Questions & Answers

  What was annual percentage increase in the winners check

The winner's prize money was $150. In 2006, the winner's check was $1,225,000. What was the annual percentage increase in the winner's check over this period? If the winner's prize increases at the same rate, what will it be in 2040?

  Calculate the firm cash conversion cycle

Multiple changes in cash conversion cycle Garrett Industries turns over its inventory six times each year; it has an average collection period of 45 days and an average payment period of 30 days. Calculate the firm’s cash conversion cycle, its daily ..

  What is the firm cost of equity

What is the value of the firm according to MM with corporate taxes? If the following is true: EBIT: $100,000 rd: 12% Tc: 30% Debt: $500,000 rsU: 16%. What is the firm's cost of equity? If the following is true:

  Spot rate-estimate the profit or loss per unit

The spot rate of the New Zealand dollar is $.70. A call option on New Zealand dollars with a 1-year expiration date has an exercise price of $.71 and a premium of $.02. A put option on New Zealand dollars at the money with a 1-year expiration date ha..

  Calculate npv and irr for investment-valuation problem

Initial investment = $1,000,000 machine, the project term is 6 years, sales for year 1 are estimated to be $1,000,000, and will grow by 7.5% per year through year 5, sales for year 6 = $500,000, variable costs are estimated to be 30% of sales & fixed..

  What is payback period of project with average cash outflows

What is the payback period of a project with average cash outflows of $8,000, average annual cash inflows of $10,000, and an initial investment of $13,000? The payback period is how many years?

  Capital structure-weighted average cost of capital

What is the Acme Company’s weighted average cost of capital if its cost of before-tax debt is 8% (20% of overall capital structure), its cost of preferred stock is 9.5% (20% of capital structure) and is cost of internal equity is 15.5% (60% of the ca..

  Decided to bid on the contract

Romo Enterprises needs someone to supply it with 127,000 cartons of machine screws per year to support its manufacturing needs over the next five years, and you've decided to bid on the contract. If your tax rate is 30 percent and you require a retur..

  Considering expanding facilities-what is net present value

A company is considering expanding its facilities. This would create an increase in after-tax net cash flow of $1,500,000 annually for 20 years. The expansion would require a capital investment (an initial outlay) of $5,800,000 today, and another $2,..

  Result in initial aftertax cash savings

Och, Inc., is considering a project that will result in initial aftertax cash savings of $1.84 million at the end of the first year, and these savings will grow at a rate of 1 percent per year indefinitely. What is the maximum initial cost of company..

  The efficient frontier indicates

The "efficient frontier" indicates:

  Identified nonrandom variations in medication errors

A hospital has identified nonrandom variations in medication errors. These errors can emanate along a process from prescription orders to delivery to a patient. Draw a flow chart for the medication process. Construct a cause - and - effect diagram sh..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd