Weismann Co. issued 11-year bonds a year ago at a coupon rate of 7 percent. The bonds make semiannual payments and have a par value of $1,000. If the YTM on these bonds is 6 percent, what is the current bond price?
In: Finance
A year ago, Perlman Co. issued a 15-year bond, at a coupon rate of 4.9% per annum paid semi-annually. If the bonds have a par value of $1000, and YTM is 4.5%, what is the current bond price?
Select one:
a. $1041.00
b. $1041.22
c. $1040.00
In: Finance
If 10-year T-bonds have a yield of 6 %, and the 10-year corporate bonds of Raytheonion Inc. yield 9 %, the maturity risk premium on all 10-year bonds is 1.52%, and corporate bonds have a 0.48 % liquidity premium versus a zero liquidity premium for T-bonds, what is the default risk premium on the corporate bond?
In: Finance
A company's 5-year bonds are yielding 7.85% per year. Treasury bonds with the same maturity are yielding 5.9% per year, and the real risk-free rate (r*) is 2.45%. The average inflation premium is 3.05%, and the maturity risk premium is estimated to be 0.1 x (t - 1)%, where t = number of years to maturity. If the liquidity premium is 1.05%, what is the default risk premium on the corporate bonds? Round your answer to two decimal places.
In: Finance
You are comparing a 10-year corporate bond and a 30-year corporate bond for the same firm. Other firms of the same risk-class have a default risk premium of 1.80%, and a liquidity risk premium of 2.60%. The current return on a 10-year treasury is 3.60%. The maturity premium on the 10-year treasury is 1.80%, what is the maturity risk-premium for the 30-year bond if the yield to maturity is 10.70%?
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How do you figure out the return of capital and abnormal earnings for each year?
(Year 2020, 2021,2022)
|
Net income |
68,258 | 81,225 | 84,980 |
| Cost of equity capital | 487,560 | 514,080 | 551,820 |
| Book value of equity | 0.15504 | 0.17034 | 0.13218 |
In: Finance
A company's 5-year bonds are yielding 9% per year. Treasury bonds with the same maturity are yielding 4.7% per year, and the real risk-free rate (r*) is 2.85%. The average inflation premium is 1.45%, and the maturity risk premium is estimated to be 0.1 × (t - 1)%, where t = number of years to maturity. If the liquidity premium is 0.9%, what is the default risk premium on the corporate bonds? Round your answer to two decimal places.
In: Finance
| An asset used in a four-year project falls in the five-year MACRS class for tax purposes. The asset has an acquisition cost of $6,050,000 and will be sold for $1,250,000 at the end of the project. If the tax rate is 25 percent, what is the aftertax salvage value of the asset? Refer to Table 8.3. (Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, rounded to 2 decimal places, e.g., 1,234,567.89.) |
In: Finance
The Jones Company has just completed the third year of a five-year MACRS recovery period for a piece of equipment it originally purchased for $296,000.
a. What is the book value of the equipment?
b. If Jones sells the equipment today for $184,000 and its tax rate
is 25%, what is the after-tax cash flow from selling it?
Note: Assume that the equipment is put into use in year 1.
In: Finance
Your company is estimated to make dividends payments of $2.9 next year, $3.5 the year after, and $4.4 in the year after that. The dividends will then grow at a constant rate of 5% per year. If the discount rate is 9% then what is the current stock price?
In: Finance