You find the following corporate bond quotes. To calculate the number of years until maturity, assume that it is currently January 15, 2016. The bonds have a par value of $2,000. Company (Ticker) Coupon Maturity Last Price Last Yield EST $ Vol (000’s) Xenon, Inc. (XIC) 6.100 Jan 15, 2027 94.253 ?? 57,369 Kenny Corp. (KCC) 7.190 Jan 15, 2026 ?? 5.28 48,948 Williams Co. (WICO) ?? Jan 15, 2033 94.805 6.98 43,809 What price would you expect to pay for the Kenny Corp. bond? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Price $ What is the bond’s current yield? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Current yield %
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You find the following Treasury bond quotes. To calculate the number of years until maturity, assume that it is currently May 2016. The bonds have a par value of $1,000. Rate Maturity Mo/Yr Bid Asked Chg Ask Yld ?? May 21 103.5397 103.5275 +.3235 5.899 6.002 May 26 104.4887 104.6344 +.4233 ?? 6.138 May 36 ?? ?? +.5340 3.931 In the above table, find the Treasury bond that matures in May 2036. What is the asked price of this bond in dollars? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Asked price $ If the bid-ask spread for this bond is .0637, what is the bid price in dollars? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Bid price $
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You find the following Treasury bond quotes. To calculate the number of years until maturity, assume that it is currently May 2016. The bonds have a par value of $1,000. Rate Maturity Mo/Yr Bid Asked Chg Ask Yld ?? May 26 103.5488 103.6370 +.3041 2.369 5.324 May 31 104.4978 104.6435 +.4317 ?? 6.173 May 41 ?? ?? +.5431 4.071 In the above table, find the Treasury bond that matures in May 2026. What is the coupon rate for this bond? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Coupon rate %
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Bill Smith, CFO of Acme Inc., is evaluating a new project that costs $125,000 and is expected to last 6 years. The required return on this project is 15%, compounded monthly. This project is expected to earn the same cash flow each month over the life of the project. In order to be indifferent between accepting and rejecting this project, the monthly cash flow must be: A) $2,004.34 B) $2,942.65 C) $2,752.47 D) $1,736.11 E) $2,643.13
need steps and explanation
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Using the information provided in the following table, find the value of each asset:
The value of Asset A is
The value of Asset B
The value of Asset C
The value of Asset D
The value of Asset E
|
Asset |
End of Year |
Amount |
Appropriate required return |
|
|
A |
1 |
$ |
7,000 |
8% |
|
2 |
7,000 |
|||
|
3 |
7,000 |
|||
|
B |
1 through∞ |
$ |
500 |
4% |
|
C |
1 |
$ |
0 |
5% |
|
2 |
0 |
|||
|
3 |
0 |
|||
|
4 |
0 |
|||
|
5 |
48,000 |
|||
|
D |
1 through 5 |
$ |
1,200 |
4% |
|
6 |
8,200 |
|||
|
E |
1 |
$ |
3,000 |
7% |
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A bond currently sells for 104% of par value and has a yield to maturity of 8.22 percent. The bond natures in 5 years and pays interest semi annually. What is the coupon rate on the bond?
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A firm has a total debt of 10 million, and equity of 15 million. The company pays 8% interest on the debt and return on equity is 14%. If the tax rate of the company is 35%, calculate the cost of capital for the company?
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You are considering a project with an opportunity cost of 10% and that offers up the following two possible payouts based on your ability to market the product:
In the optimistic state you expect the following payouts, -$4,795, $8,000, $8,000. Based on your pessimistic expectations you expect the following -$4,795, -$500, -$10,000. The cash flows fall at time period 0, 1 and 2.
Your sense is that there is a 40% chance things will turn out well and a 60% chance things will turn out poorly. What is your expected NPV if you are able to abandon the project after year one?
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|
Dorman Industries has a new project available that requires an initial investment of $6.2 million. The project will provide unlevered cash flows of $845,000 per year for the next 20 years. The company will finance the project with a debt-to-value ratio of .25. The company’s bonds have a YTM of 6.3 percent. The companies with operations comparable to this project have unlevered betas of 1.32, 1.25, 1.47, and 1.42. The risk-free rate is 3.3 percent, and the market risk premium is 6.5 percent. The company has a tax rate of 34 percent. |
|
What is the NPV of this project? (Enter your answer in dollars, not millions of dollars, e.g., 1,234,567. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) |
| NPV | $ |
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How are MNCs subject to political risk? Stated differently, in what manner are MNCs exposed when it comes to political risk?
I. Transfer Risk
II. Operational Risk
III. Control Risk
IV. Presidential Narcissism
Group of answer choices
I, II, III, IV
II & III only
I, II, & III only
I & II only
I, II & IV only
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H. Cochran, Inc., is considering a new three-year expansion project that requires an initial fixed asset investment of $2,350,000. The fixed asset will be depreciated straight-line to zero over its three-year tax life, after which time it will be worthless. The project is estimated to generate $2,290,000 in annual sales, with costs of $1,310,000. Assume the tax rate is 21 percent and the required return on the project is 10 percent.
What is the project’s NPV?
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Corporate bonds are classified as “structured” investments; explain their importance to asset portfolios and what is the value of a warrant that is issued with a corporate bond to investors and to the issuing corporation?
Explain with examples.
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| Consider the following information on a portfolio of three stocks: |
| State of Economy |
Probability
of State of Economy |
Stock A Rate of Return |
Stock B Rate of Return |
Stock C Rate of Return |
| Boom | .15 | .04 | .33 | .55 |
| Normal | .60 | .09 | .13 | .19 |
| Bust | .25 | .15 | –.14 | –.28 |
| a. |
If your portfolio is invested 40 percent each in A and B and 20 percent in C, what is the portfolio’s expected return? The variance? The standard deviation? (Do not round intermediate calculations. Round your variance answer to 5 decimal places, e.g., .16161. Enter your other answers as a percent rounded to 2 decimal places, e.g., 32.16.) |
| b. | If the expected T-bill rate is 3.75 percent, what is the expected risk premium on the portfolio? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) |
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Crete Logistics is thinking of opening a new warehouse, and the key data are shown below. The company will be leasing the building at a cost of $2,000 per month. The equipment for the project would be depreciated by the straight-line method over the project's 4-year life to a salvage value of zero, but you estimate the equipment's true salvage value is $10,000. New working capital of $15,000 would be required, and revenues and other operating costs would be constant over the project's 4-year life.
|
WACC |
10.0% |
|
Equipment Cost |
$65,000 |
|
Sales revenues, each year |
$123,000 |
|
Annual Operating Cost (including lease payment and excluding depreciation) |
$49,000 |
|
Tax rate |
35% |
What is the project's NPV?
In: Finance
| Equation 1.4 Future Value of a Lump Sum | |||
| Present Value | $1,000.00 | ||
| i = Interest Rate | 8.00% | ||
| n = Number of Periods | 4 | ||
| Future Value | $1,360.49 | ||
| *For monthly compounding; n = number of months, i = the annual interest rate divided by 12 | |||
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