Washington Corporation has a $1000 par value bond outstanding paying annual interest of 8%. The bond matures in 20 years. If the present yield to maturity for this bond is 10%, calculate the current price of the bond. Use annual analysis.
Assume the company has issued 10,000 bonds with a coupon rate of 8% and a face value of 1000 per bond, and the company has a marginal tax rate of 35%. Calculate the aftertax cost of the interest expense.
Bert is planning to open a savings account that earns 1.6% simple interest yearly. He wants to earn exactly $240 in interest after 3 years. How much money should he deposit?
2.The warehouse currently has 525,000 shares of stock outstanding with par value of $1.00 per share and a market value of $19 a share. The company has announced a 3-for4stock split. After the split, how many shares outstanding will the Warehouse have and at what market price per share?
1.Southern Fried chicken is planning on paying a $1.30 a share dividend next year, a $1.40 per share dividend the following year, and a final liquidating dividend of $9.50 per share 3 years from now. The required return is 14.5 percent. How much will your homemade dividend be in three years if...
A six-month call is the right to buy stock at $20. Currently, the stock is selling for $22, and the call is selling for $5. You buy 100 shares (2200) and sell one call (in other words, you recieve $500). If, at the expiration date of the call, the price of the stock is $29, what is your...
A general motors bond carries a coupon rate of 8%, has 9 years until maturity and sell at a yield maturity of 7%.What interest payments do bondholders receive each year? At what price does the bond sell (assume annual interest payments) What will happen to the bond price it the yield to maturity...
BMGT 228 - Study Guide 3 SP10 1. Peter Mills is considering a project with the following cash flows. Should this project be accepted based on its rate of return if the company requires a 14 percent return? A. yes; the project's rate of return is 14.12 percent B. yes; the...
6. An 8 percent preferred stock with a market price of $110 per share and a $100 par value pays a cash dividend of _________.
Highland, Inc. has the following estimated quarterly sales for next year. The accounts receivable period is 30 days. How much does the firm expect to collect in the fourth quarter? Assume that each month has 30 days.
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1. Can you help me with this valuation problem?: Imagine that you are trying to evaluate the economics of purchasing an automobile. You expect the car to provide annual after-tax cash benefits of $1,200 at the end of each year and assume that you can sell the car for after-tax proceeds of $5,000 at the end of the planned 5-year ownership period. All funds for purchasing the car will be drawn from your savings, which are currently earning 6% after taxes.
- a.Identify the cash flows, their timing, and the required return applicable to valuing the car.
- b.What is the maximum price you would be willing to pay to acquire the car? Explain.
2. How do you calculate the before tax-cost of the Sony bond and the after-tax cost of the Sony bond given the following information?:
- David Abbot is interested in purchasing a bond issued by Sony. He has obtained the following information on the security:
- Sony bond
- Par value $1,000 Coupon interest rate 6% Tax bracket 20%
- Cost $930 Years to maturity 10