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Question - Williams Industries has decided to borrow money by issuing perpetual bonds with a coupon rate of 8.5 percent, payable annually, and a par value of $1,000. The one-year interest rate is 8.5 percent. Next year, there is a 30 percent probability that interest rates will increase to 12 percent and a 70 percent probability that they will fall to 7 percent.
a. What will the market value of these bonds be if they are noncallable?
b. If the company decides instead to make the bonds callable in one year, what coupon rate will be demanded by the bondholders for the bonds to sell at par? Assume that the bonds will be called if interest rates fall and that the call premium is equal to the annual coupon.
c. What will be the value of the call provision to the company?
Your monthly rate can be expressed as a ratio x : 100. What quantity does the x represent? What is the monthly or periodic interest rate?
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Sawyer Furniture Company concluded its first year of operations in which it made sales of $920,000, all on installment. Collections during the year from down payments and installments totaled $302,000. Purchases for the year totaled $735,200; the cos..
Black's additional paid-in capital was $650,000. What should be the balance in Black's additional paid-in capital account immediately after the reverse stock split?
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What is the financial advantage (disadvantage) for the company as a whole (on a per unit basis) if the Quark Division rejects the $407 price
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Venetian Company management wants to maintain a minimum monthly cash balance of $20,500. How much cash, if any, must be borrowed to maintain the desired minimum monthly balance?
For the year ended December 31, 2020, Pharoah Ltd. reported income before income taxes of $90,000. Prepare the journal entries to record 2020 income taxes.
Multiple choice questions on budgetary control system - The cash budget is usually prepared before the production budget.
What is the contribution margin ratio for 2013 and Compute Ace's break-even point for 2013 in dollars.
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