User Account

All Pages

What is the value of the assets required by the debt holders

Assignment Help Finance Basics
Reference no: EM133004847

The market value of the assets of a corporation is currently $290.0 million but the owners wish to only use as collateral a value that will result in an interest rate of about 10%. The firm has on issue a debt outstanding that has a par value of $35.0 million and a due date of exactly five years. No intermediate interest payments are required. The risk-free (continuous) rate is 3.25% and the standard deviation of returns of the firm's assets is 60%.

What is the value of the assets required by the debt holders to permit a fair interest rate of approximately 10% (answer should ensure that the fair interest rate is in the range of >9% and <11%)

Reference no: EM133004847

Questions Cloud

How the power of diversification shows in analysis : Analyzing the mean-variance relationship in a market where there are only risky assets enables decomposing n portfolio variance into diversifiable vs non- diver
What are the business risks involved in running the business : One major factor linked to the value of business that shows what are the business risks involved in running the business. Future Prospects.
Components of a bullish european call spread : Stock CBA is trading at $50 and is not expected to pay dividends. The following European puts are traded and will expire in 3 months. The three-month interest r
Which largely depends on the investment objectives : Explain Which largely depends on the investment objectives of the investors or financial managers managing the investment portfolio?
What is the value of the assets required by the debt holders : What is the value of the assets required by the debt holders to permit a fair interest rate of approximately 10% (answer should ensure that the fair interest r
Which refers to the possible range of values : Which refers to the possible range of values where the real firm value lies? Which value of a business can be basically linked to three major factors, except
What is the long-term and strategic decision of the company : One major factor linked to the value of business that reflects what is the long-term and strategic decision of the company. Current Operations
Which is the estimation of an asset value : Which is the estimation of an asset's value based on variables perceived to be related to future investment returns, on comparisons with similar assets
Which value is determined under the going concern assumption : Which Value is determined under the going concern assumption? Which refer to the characteristics of an entity related to its financial strength, profitability

Reviews

Write a Review

Finance Basics Questions & Answers

  Financial reporting and analysis

Finance is about Gunns Ltd, a company in dealing with forestry products in Australia. The company has also been listed in Australian Stock Exchange. As many companies producing forestry products, even Gunns Ltd is facing various problems. Due to the ..

  A report on financial accounting

This report is specific for a core understanding for Financial Accounting and its relevant factors.

  Describe the types of financial ratios

Describe the types of financial ratios and other financial performance measures that are used during venture's successful life cycle.

  Differences between sole proprietorship and corporation

Briefly describe the major differences between a sole proprietorship and a corporation

  Prepare a cash budget statement

Calculate the expected value of the apartment in 20 years' time. What is the mortgage loan repayment at the beginning of each month

  What are the implied interest rates

What are the implied interest rates in Europe and the U.S.?

  State pricing theory and no-arbitrage pricing theory

State pricing theory and no-arbitrage pricing theory

  Small business administration

Identify the likely stage for each venture and describe the type of financing each venture is likely to be seeking and identify potential sources for that financing.

  Effect of financial leverage

The Effect of Financial Leverage and working capital management

  Evaluate the basis for the payment to the lender

Evaluate the basis for the payment to the lender and basis for the payment to the company-counterparty.

  Importance of opps, ipps, mpfs and dmepos

Research and discuss the differences and importance of : OPPS, IPPS, MPFS and DMEPOS.

  Time value of money

Time Value of Money project

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!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

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