Which debt instrument is the last expensive

Assignment Help Financial Management
Reference no: EM131847824

The company has determining whether to support a $100000 of current asset with the bank note or short-term bond. The bank offers to have the 2 years note to receive a $100000 and repay $119000 at the end of year 2. Alternatively, the company can sell 8.5% coupon bond for 2 years of return in $1000 par value of the price $937. Which debt instrument is the last expensive and how many % lower than the more expensive one?

Reference no: EM131847824

Questions Cloud

Free cash cost of capital is estimated : Free Cash Inc.’s cost of capital is estimated to be 9 percent. Free cash flows beyond year 3 are estimated to grow at an annual rate of 4 percent.
Why governments try to intervene in the currency market : We are investigating why governments try to intervene in the currency market to keep values of their own currency low.
How long will it take to pay back the initial investment : Your firms required rate of return is 15%. How long will it take to pay back the initial investment?
Applied materials comprehensive analysis : Applied Materials Comprehensive Analysis Case Using the Financial Statement Analysis Template
Which debt instrument is the last expensive : Which debt instrument is the last expensive and how many % lower than the more expensive one?
Why can the IRR method lead to sub optimal decision : Why can the IRR method lead to sub optimal decision-making by organizations?
Considering investing in mutual fund : You are considering investing in a mutual fund. The fund is expected to earn a return of 15% in the next year.
Calculate the cost of externally generated equity : Calculate the cost of externally generated equity for Gen X.
No rights to increase their investment in future rounds : Tai and Anton have started a business. They give them common stock with no rights to increase their investment in future rounds.

Reviews

Write a Review

Financial Management Questions & Answers

  True about the return on the investment

Ben invests $10,000 at a rate of interest of 5 percent for 40 years. Which of the following is true about the return on the investment?

  Adjustable rate mortgage loan

A borrower takes out a 30-year adjustable rate mortgage loan for $200,000 with monthly payments. What would the Year 3 monthly payment be?

  Based on the descriptions of customer lifetime value

Based on the descriptions of Customer Lifetime Value (CLV) in the textbook, can you identify a specific store or situation where you have a CLV?

  What is the risk premium on the market

What is the risk premium on the market? What is the required return on an investment with a beta of 1.4?

  Considering expanding into another rural area

A local restaurant owner is considering expanding into another rural area. The expansion project will be financed through a line of credit with City Bank. The administrative costs of obtaining the line of credit are $500, and the interest payments ar..

  What will be the new stock price after the tights issues

Big Box retailing has a market capitalization of $500 million and 20 million shares outstanding. In order to finance its growth, the management of Big Box plans to raise further capital through a rights issue. For every ten rights, shareholders can p..

  What is the inflation premium

You are considering an investment in 30-year bonds issued by a corporation. What is the inflation premium?

  Currently the risk free rate and market premium

Currently the risk free rate is 1% and the market premium is 3%. Given this information, which of the following statements is correct?

  Evaluating the arbitrage profit potential in the same market

Copenhagen Covered. Heidi Hoi Jensen is now evaluating the arbitrage profit potential in the same market after interest rates change.

  Macrs depreciation schedule

Zippy Corporation just purchased computing equipment for $28,000. The equipment will be depreciated using a five-year MACRS depreciation schedule. If the equipment is sold at the end of its fourth year for $12,000, what are the after-tax proceeds fro..

  How much interest will refinancing save

A person purchased a $233,655 home 10 years ago by paying 15% down payment and signing a 30-year mortgage at 10.8% compound monthly. Interest rates have dropped and the owner wants to refinance the unpaid balance by signing a new 15-year mortgage at ..

  Continue generating this cash flow for your descendants

You've decided that your family is comfortable living on an annual income of 150,000, growing at 4% per year. You'd also want to continue generating this cash flow for your descendants, forever. With interest rates of 8%, how much wealth would you ne..

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