Kintel, Inc., management wants to raise $1 million by issuing six-year zero coupon bonds with a...

Kintel, Inc., management wants to raise $1 million by issuing six-year zero coupon bonds with a face value of $1,000. The company’s investment banker states that investors would use an 10.27 percent discount rate to value such bonds. Assume semiannual coupon payments. At what price would these bonds sell in the marketplace? (Round intermediate calculations to 4 decimal places, e.g. 1.2514 and Bond price to 2 decimal places, e.g. 15.25) Market rate $ How many bonds would the firm have to issue to raise $1 million? (Round intermediate calculations to 4 decimal places, e.g. 1.2514 and number of bonds to 0 decimal places, e.g. 5,275.)

Expert Solution

Cal:

jeff jeffy answered 2 years ago

Crane, Inc., management wants to raise $1 million by issuing six-year zero coupon bonds with a...

Crane, Inc., management wants to raise $1 million by issuing six-year zero coupon bonds with a face value of $1,000. The company’s investment banker states that investors would use an 10.9 percent discount rate to value such bonds. Assume semiannual coupon payments. At what price would these bonds sell in the marketplace? (Round answer to 2 decimal places, e.g. 15.25) Market Rate? How many bonds would the firm have to issue to raise $1 million? (Round answer to 0 decimal...

Your company wants to raise $10 million by issuing 15-year zero-coupon bonds. If the yield to...

Your company wants to raise $10 million by issuing 15-year zero-coupon bonds. If the yield to maturity on the bonds will be 5% (annual compounded APR), what total face value amount of bonds must you issue? The total face value amount of bonds that you must issue is $ nothing. (Round to the nearest cent.)

Your firm wishes to raise 10,000,000 by either issuing regular coupon bonds or issuing zero coupon...

Your firm wishes to raise 10,000,000 by either issuing regular coupon bonds or issuing zero coupon bonds. The regular coupon bonds will have a 10% coupon rate. Both issues are expected to mature in 12 years,pay annual, and have a yield of 6%. a.If they opted to go with regular bonds, what is the firms total repayment in year 12? b.If they opted to go with zero coupon bonds, what is the firms total repayment in year 12? please explain...

1. City bank has six-year zero coupon bonds with a total face value of $20 million....

1. City bank has six-year zero coupon bonds with a total face value of $20 million. The current market yield on the bonds is 10 percent. Suppose that during last year the mean change in daily yields on six-year zero-coupon bonds was 25 basis points, while the standard deviation was 30 basis points. Yield changes are assumed to be normally distributed (critical value = 1.96 for 95% confidence interval) Question: Continue from #1, what is the daily earnings at risk (DEAR)...

City bank has six-year zero coupon bonds with a total face value of $20 million. The...

City bank has six-year zero coupon bonds with a total face value of $20 million. The current market yield on the bonds is 10 percent. Suppose that during last year the mean change in daily yields on six-year zero-coupon bonds was 25 basis points, while the standard deviation was 30 basis points. Yield changes are assumed to be normally distributed (critical value = 1.96 for 95% confidence interval) Question: Continue from #1, what is the daily earnings at risk (DEAR) of...

a) Warson Motors wants to raise $2 million by selling 20-year coupon bonds at par. Comparable...

a) Warson Motors wants to raise $2 million by selling 20-year coupon bonds at par. Comparable bonds in the market have a coupon rate of 6.3 percent, semiannual payments, 20 years to maturity, and are selling at 96.5 percent of par. What coupon rate should Warson Motors set on its bonds? b) The 7.2 percent bond of Blackford, Inc. has a yield to maturity of 7.3 percent. The bond matures in seven years, has a face value of $1,000, and...

Zero Coupon Bonds. Suppose your company needs to raise $40 million and you want to issue...

Zero Coupon Bonds. Suppose your company needs to raise $40 million and you want to issue 20-year bonds for this purpose. Assume the required return on your bond issue will be 5.7 percent, and you’re evaluating two issue alternatives a 5.7 percent semiannual coupon bond and a zero coupon. Your company’s tax rate is 21 percent. a. How many of the coupon bonds would you need to issue to raise the $40 million? How many of the zeros would...

Your firm is issuing 22-year zero coupon bonds with a 5% yield and pays annually. The...

Your firm is issuing 22-year zero coupon bonds with a 5% yield and pays annually. The goal is to raise $5,000,000. What is your company’s total repayment 22 years from now? 14,626.30 14,626,303.60 341.85 14,627,000.00 None of the above. Make sure to round at the very end of the problem and to the nearest hundredth.

Cyberdyne Systems is issuing a series of coupon bonds to raise $250M to fund research and...

Cyberdyne Systems is issuing a series of coupon bonds to raise $250M to fund research and development at its Skynet division. Each bond will have a face value of $1,000 and will mature in 10 years. The bonds will pay semi-annual coupons with a coupon rate of 6.5%. The yield to maturity on the bonds is 10%. What is the fair price for one of the bonds? A) $700.23 B) *$781.91 C) $876.54 D) $933.41 E) $1,000.00 The answer is...

A company has decided to issue 30-year zero-coupon bonds to raise funds. The required return on...

A company has decided to issue 30-year zero-coupon bonds to raise funds. The required return on the bonds will be 9% and face value will be $1,000. What will these bonds sell for at issuance? Do not round intermediate calculations. Round the final answer to 2 decimal places. Omit any commas and the $ sign in your response. For example, an answer of $1,000.50 should be entered as 1000.50

Question