The City of Allentown is issuing a 30-year bond with a face value of $80,000,000 and a stated annual interest rate of 5 percent. The town will make interest payments twice a year.
1. Calculate the semiannual interest payment.
2. Calculate how much Allentown will receive from the bond offering under the following conditions:
a. Market interest rates remain unchanged at the time of the offering.
b. Market interest rates increase to 6 percent at the time of the offering
In: Finance
The net income reported on the income statement of CamilloX Inc. for the current year was $150,000. Depreciation recorded on equipment and building amounted to $45,000 for the year. Balances of the current asset and current liability accounts at the beginning and end of the year are as follows:
|
Account |
End of Year |
Beginning of Year |
|
Cash |
42,875 |
36,250 |
|
Trade Receivables (net) |
147,500 |
137,500 |
|
Inventories |
109,375 |
93,750 |
|
Prepaid Expenses |
9,250 |
11,875 |
|
Accounts Payable |
57,000 |
40,000 |
|
Salaries Payable |
7,625 |
10,625 |
|
Dividends Payable |
4,250 |
3,125 |
|
Interest Received on Investments |
1,800 |
1,500 |
Prepare the cash flows from operating activities section of the statement of cash flows using the indirect method.
In: Accounting
What is the value (to the nearest cent) of a 4 year 5.9% coupon bond with a face value of $1,000. The yield-to-maturity on the bond is 11.7% and the bond makes semi-annual coupon payments.
Select one: a. $818.84 b. $2447.84 c. $822.71 d. $642.37
In: Finance
Consider a project with free cash flows in one year of $ 146,335 or $ 179,830 with each outcome being equally likely. The initial investment required for the project is $92,400, and the project's cost of capital is 20%. The risk-free interest rate is 7%.
a. What is the NPV of this project?
b. Suppose that to raise the funds for the initial investment, the project is sold to investors as an all-equity firm. The equity holders will receive the cash flows of the project in one year. How much money can be raised in this way long dash —that is, what is the initial market value of the unlevered equity?
c. Suppose the initial $92,400 is instead raised by borrowing at the risk-free interest rate. What are the cash flows of the levered equity, what is its initial value and what is the initial equity according to MM?
In: Finance
ABC paid a dividend of $3.00 this past year. The dividends are expected to grow at a rate of 20% for the next three years, and at a constant 3% rate thereafter. The required rate of return for investors in this stock is 10%. Calculate the value of this stock today.
In: Finance
A project will produce an operating cash flow of $7,300 a year for three years. The initial investment for fixed assets will be $11,600, which will be depreciated straight-line to zero over the asset's 4-year life. Ignore bonus depreciation. The project will require an initial $500 in net working capital plus an additional $500 every year with all net working capital levels restored to their original levels when the project ends. The fixed assets can be sold for an estimated $2,500 at the end of the project, the combined tax rate is 23 percent, and the required rate of return is 12 percent. What is the net present value of the project?
|
$7,500.95 |
||
|
$9,896.87 |
||
|
$7,072.72 |
||
|
$6,353.41 |
||
|
$8,398.29 |
In: Finance
[The following
information applies to the questions displayed
below.]
At the beginning of the year, Plummer's Sports Center bought three used fitness machines from Brunswick Corporation. The machines immediately were overhauled, installed, and started operating. The machines were different; therefore, each had to be recorded separately in the accounts.
| Machine A | Machine B | Machine C | ||||
| Invoice price paid for asset | $ | 32,300 | $ | 32,300 | $ | 23,400 |
| Installation costs | 2,300 | 2,400 | 1,100 | |||
| Renovation costs prior to use | 4,000 | 1,000 | 1,900 | |||
By the end of the first year, each machine had been operating 6,500
hours.
2. Prepare the entry to record depreciation expense at the end of Year 1, assuming the following. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
|
ESTIMATES |
|||||
| Machine | Life | Residual Value | Depreciation Method | ||
| A | 9 years | $1,700 | Straight-line | ||
| B | 64,000 hours | 3,700 | Units-of-production | ||
| C | 8 years | 1,500 | Double-declining-balance | ||
In: Finance
The following payments are made under an annuity: 12 at the end
of the 44th year, 11 at the end of the 55th year, decreasing by 11
each year until nothing is paid. Find the present value if the
annual effective rate of interest is 3%.
In: Finance
Consider a 2-year bond with a principal of $100 that provides coupons at the rate of 3.8% per annum semiannually. Suppose the yield on this bond is 6.1% per annum with continuous compounding.
(a) What is the duration of this bond?
(b) Suppose the yield on this bond increases by 0.1%.
i. Calculate the new bond price exactly.
ii. Estimate the new bond price approximately using duration.
In: Finance
What is it like to live in this year.
is a journal question.
two pages please?
In: Psychology