problem12_16

problem12_16 - = 10.675% Account Payable to Long term debt...

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Example 1. debt to equity ratio = 1.3 Rs = 17% Rb = yield to maturity of a 5-year bond, annual payments annual coupon rate = 9.00% Price of the bond = 1000 (par) You have to compute the YTM = 9.00% Account Payable to Long term debt 0.2 Solutions: a) NPV= 32.11 b) NPV = 127.38 c) NPV = 5.88 Example 2. Debt to equity ratio = 2 Rs = 18% Rb = yield to maturity of a 5-year bond, annual payments annual coupon rate = 9.00% Price of the bond = 900 You have to compute the YTM
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Unformatted text preview: = 10.675% Account Payable to Long term debt 0.2 Solutions: a) NPV= 50 b) NPV = 78.22 c) NPV = 6.41 Example 3. Debt to equity ratio = 0.5 Rs = 20% Rb = yield to maturity of a 5-year bond, annual payments annual coupon rate = 9.00% Price of the bond = 1200 You have to compute the YTM = 10.675% Account Payable to Long term debt 0.2 Solutions: a) NPV= -2.25 b) NPV = 375.90 c) NPV = -7.77...
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This note was uploaded on 11/02/2011 for the course FIN 320 taught by Professor Staff during the Fall '08 term at Ill. Chicago.

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