WORKSHOP 5 ANSWERS
BONDS & STOCKS
PART 1: BONDS
You have gathered the folowing information regarding a corporate bond:
Years to maturity
8% (Paid annually)
A. Complete the following time line showing the cash
Use the Nabors Inc. financialstatements below for the remaining questions or probems.
NABORS INC. ($MILLIONS)
Cost of goods sold
Financial Management 5190
Quiz 2 Questions
PLEASE NOTE THAT YOU MUST INCLUDE ALL OF YOUR CALCULATIONS IN ORDER TO RECEIVE CREDIT FOR YOUR ANSWERS.
PART 1: Time Value of Money
5% 1. Bank A will pay 9% simple interest. Bank B will pay 9% int
COST OF CAPITAL
YOU HAVE GATHERED THE FOLLOWING MARKET AND MBA COMPANY DATA:
Corporate Ratings and Default Premiums :
Stock market total return:
U.S. Treasury Bill Rate:
BOND VALUE AND YIELDS
Terms. Bonds are long-term debt securities with contractual obligations of the issuer to
pay stated amounts at specific times, but they have no ownership interest in the business.
They are usually issued in $1000 de
Time Value Worksheet
1. Show the A-D cash flows below in the following time line:
A. A $1000 future value at the end of year 4.
B. An investment of $1000 at the beginning of year 1
C. An $80 4 year ordinary annuity
D.The combined cash flow of A
Like bonds, stock values are the present value of future cash flows. But, unlike bonds, stocks have
no contractual payments or maturity; so estimating cash flow is more complicated. Stock valuation
methods usually assume cas
CAPITAL PROJECT - Wonder Widget
This workshop is in 4 parts. After completing each part return to class for a
discussion and the answers to that part. Please do not move to
another part until you are asked to do so.
PART 1 RELEVANT COSTS