1. You are considering the purchase of a 7%, 15-year bond that pays interest annually. If the yield to maturity on the bond is 6%, what price will you pay? Round your answer to the nearest cent.
2. What is the current yield on the bond from part a? Round your answer to the nearest tenth of a % (e.g., 12.2%).
3. Assume that you purchased the bond at the price determined in part a. It is now 2 years later and the bond is selling for $1120. What is the bond's yield to maturity at this point in time? Round your answer to the nearest tenth of a percent.
4. Now assume that you purchased the bond at the price determined in part a and now sell the bond for $1120. Assume you receive the second year's interest payment on the sale date. What is your rate of return on this investment? You must use a financial calculator to compute this return and round your answer to the nearest tenth of a percent.
The expert examines bond prices, current yields, YTM and ROI.
Lease- annual rental, cost of preferred stock, dividend yield on the stock at different payout ratios, return on a project, yield on a bond
1. You are leasing a machine for your business. It will cost the lessor $15,000 to be carried for a 6 year. lease term, and you will be putting down 40.00%. What will the annual rental charge be to you if the lessor pays 15% and must earn profits and risk of 5% on the deal?
2. A preferred stock issue was sold 2 years ago by your firm for a price of $25.00. The current market price of preferred issue is $17.00. The stock has a par value of $25.00 and a coupon rate stated at 5.00%. What is the cost of the issue (kps). What was the cost when it was issued, if you paid $4.00 per share in flotation costs?
3. A common stock issue is selling currently for $60.00. Net income amounts to 2,200,000, there are 300,000 shares outstanding. What would the dividend yield on the stock be at the following payout rates?
4. What maximum risk can you sustain if you invest in the following project?
Year 0 $875,000 Cost
1 $228,000 Returns
2 $196,000 "
3 $190,000 "
4 $275,000 "
5 $350,000 "
Money costs you 6.00%
Profits Desired is 4.00%
5. A bond has a 7.50% coupon rate, maturing 4 years from now. To buy this bond, you must invest $1.025 today. What will your return on investment (yield) be?View Full Posting Details