What price should the bonds sell

Assignment Help Financial Management
Reference no: EM131323985

Ken Williams Ventures' recently issued bonds that mature in 15 years. They have a par value of $1,500 and an annual coupon of 6%. If the current market interest rate is 9%, at what price should the bonds sell?

Reference no: EM131323985

Questions Cloud

What must coupon rate be on the bonds : Volbeat Corporation has bonds on the market with 11 years to maturity, a YTM of 9.5 percent, a par value of $1,000, and a current price of $946. The bonds make semiannual payments. What must the coupon rate be on the bonds?
Calculate the after-tax cost of debt under each conditions : Calculate the after-tax cost of debt under each of the following conditions: Interest rate of 13%; tax rate of 0%. Round your answer to two decimal places. % Interest rate of 13%; tax rate of 25%
What is the future worth of the equipment : Alpha Electronics can purchase a needed service for $90 per unit. The same service can be provided by equipment that costs $110,000 and that will have a salvage value of zero at the end of 10 years. Annual operating costs for the equipment will be $7..
What is the future worth of polisher : Final Finishing is considering 3 mutually exclusive alternatives for a new polisher. Each alternative has an expected life of 13 years and no salvage value. Polisher 1 requires an initial investment of $23,000 and provides annual benefits of $4,360. ..
What price should the bonds sell : Ken Williams Ventures' recently issued bonds that mature in 15 years. They have a par value of $1,500 and an annual coupon of 6%. If the current market interest rate is 9%, at what price should the bonds sell?
Estimate the total value of the firm and value per share : Do Pham is evaluating Phaneuf Accelerateur using the FCFF valuation approaches. Pham has collected the following information (currency in euro): Phaneuf has net income of 250 million, depreciation of 90 million, capital expenditures of 170 million, a..
Highest rate of return possible within their personal level : Financial planners (and engineering economists) unanimously encourage people to seek out the highest rate of return possible within their personal level of risk tolerance. Amount of Required Annual Deposit.... find this at each interest rate.
What is your estimate of the stocks price : It is projected that a firm’s next four annual dividends will be $0.50, $1.00, $1.50, and $1.75. After the fourth dividend, dividends are expected to grow at a constant annual rate of 7%. Assuming that the required rate of return for the stock is 16%..
Calculate the value of the Treasury note : Assume that a $1,000,000 par value. semiannual coupon U.S. Treasury note with two years to maturity (YTM) has a coupon rate of 5%. The yeild to maturity of the bond is 8.80%. Using this information and ignoring the other cosr involved, calculate the ..

Reviews

Write a Review

Financial Management Questions & Answers

  What is the equivalent annual annuity of machine

Company A is considering the replacement of its old, fully depreciated knitting machine. Two new models are available: Machine 190-3, which has a cost of $219,000, a 4-year expected life, and after-tax cash flows (labour savings and depreciation) of ..

  Current market values-percent common stock-preferred stock

Capital Co. has a capital structure, based on current market values, that consists of 21 percent debt, 17 percent preferred stock, and 62 percent common stock. If the returns required by investors are 11 percent, 11 percent, and 18 percent for the de..

  Explain the different results between the two correlations

Mr. & Mrs Shaw invest 60% of funds in stock A and the balance in stock B. The standard deviation of returns for stock A is 10% and on B it is 20%. Calculate the variance of portfolio returns and standard deviation assuming the correlation between the..

  What would be the fair forward price for this contract

S&P 500 index has a dividend yield of 3% today. The current index is trading at $1800 and the risk-free interest rate is 5% per annum with continuous compounding. An investor would like to enter into a short one-year forward contract on the index. Wh..

  What is this project equivalent annual cost

A five-year project has an initial fixed asset investment of $340,000, an initial NWC investment of $36,000, and an annual OCF of −$35,000. The fixed asset is fully depreciated over the life of the project and has no salvage value. If the required re..

  What is the company cost of equity capital

David Ortiz Motors has a target capital structure of 35% debt and 65% equity. The yield to maturity on the company's outstanding bonds is 11%, and the company's tax rate is 40%. Ortiz's CFO has calculated the company's WACC as 9.54%. What is the comp..

  Average interest rate provide you the average return

Consider that you are the manager of a bank and you face a potential loan applicants pool made up of equal amounts of low risks and high risks, will charging an average interest rate provide you the average (expected) return? Explain.

  Share the monopoly profit using trigger strategies

Consider an infinitely repeated Cournot duopoly with discount factor δ 0, and inverse demand functions p(Q)=a-bQ, with a>c and b>0. Find the condition on the discount factor,δ , for which the two firms could successfully collude over the monopoly ou..

  What was the capital gain of tips in dollars

TIPS Capital Return Consider a 3.75% TIPS with an issue CPI reference of 186.90. At the beginning of this year, the CPI was 197.70 and was at 202.80 at the end of the year. What was the capital gain of the TIPS in dollars?

  What is stock price today-required rate of return on stock

John is evaluating a stock that he believes will pay a dividend equal to $2.45 in exactly one year from today. Further, John expects that in addition to the dividend he will be able to sell the stock for the amount $48 per share also one year from to..

  Senior debentures and Subordinated debentures

Proctor Power has fixed assets worth $215 million and net working capital worth $115 million. It is financed partly by equity and partly by three issues of debt. These consist of $235 million of First Mortgage Bonds secured only on the company’s fixe..

  Planning to present performances

The Oviedo Thespians are planning to present performances of their Florida Revue on 2 consecutive nights in January. It will cost them $5,000 per night for theater rental, event insurance and professional musicians. The theater will also take 10% of ..

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