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Bond Valuation

Decisions About Bond Purchase

Bakersfield Co. 8.5s16 bonds pay interest semiannually, and are quoted in the WSJ ad 88 1/2. If your rate of return is 10%, would you buy these bonds in 2001 and what is the total amt. Please show the calculations to get the answer. Question about bonds purchase or not? Bakersfield Co. 8.5s16 bonds pay interest semiannual

Target Corporation Memo Highlighting Information from the Financial Statements

Deliverable Length: 2-4 pages Due Date: 7/10/2009 11:59:59 PM Refer to Target Corporation's financial statements (http://investors.target.com/phoenix.zhtml?p=irol-irhome&ref=nav%5Ffooter%5Finvestors&c=65828) . Target Corporation is currently seeking additional capital to expand its operations. Two companies have

Bond Computations for Heide Co, Reymont Co, Czeslaw, and Marie Curie Inc.

(Comprehensive Problem; Issuance, Classification, Reporting) Presented below are four independent situations. 1. On March 1, 2008, Heide Co. issued at 103 plus accrued interest $3,000,000, 9% bonds. The bonds are dated January 1, 2008, and pay interest semiannually on July 1 and January 1. In addition, Heide Co. incurred $27

Preferred Stock and Maturity Calculations

1. Bavarian Sausage, Inc. has preferred stock outstanding. This stock pays a semiannual dividend of $1.25. If the next dividend is paid six months from now and the annual required return is 10%, what should be the value of the preferred stock? Answer $25 2. A 15-year, 8%, $1000 face value bond is currently trading at $958. T

Futures Price on the Contract

A single-stock futures contract on a nondividend-paying stock with current price of $150 has a maturity of one year. If the T-bill rate is 6%, what should the futures price be? What should the futures price be if the maturity of the contract is 3 years? What if the interest rate is 8% and the maturity of the contract is 3 years

Return on Equity and Asset Management

My company is unhappy with our operations, and we believe that our asset management can be improved. Our management team points out that the average total turnover ratio in our industry is 3.00X. My management team does not want to be average and we want a total asset turnover ratio of 4.00X which would put us inline with the in

Weighted avergage cost of capital for internal and external funds

Given the following information, calculate the WACC Percent of capital structure: Debt 55% Common Equity 5 Preferred stock 40 Additional info: Bond coupon rate 8.5% Bond yield 7% Bond flotation cost 2% Dividend, expexted common $1.50 Price, common $30.00 Dividend, preferred 5% Flotation cost, preferred 3% Flotat

Investor's YTM and YTC

Laser Industries has just issued callable twelve-year, 6% coupon bonds with semi-annual coupon payments. The bonds can be called at 103 in four years or anytime thereafter on a coupon payment date. The current bond price is 101. For an investment today in these bonds (assuming no transaction costs): a. What is an investor's

Working with bond prices

Consider the two bonds described below: Bond A Bond B Maturity Years 15 20 Coupon Rate 10 6 (Paid Semiannually) Par Value 1,000 1,000 a. If both bonds had a required return of 8%, what would the bonds prices be? Show wor

Growth and Return on Invested Capital

3. How does growth and return on invested capital drive free cash flow? Illustrate with an example employing constant and non-constant growth rates. 7. Why might large firms experience lower rates of growth than smaller firms? What is the danger of having a large company attempt to match the growth of a small company?

Calculating Principal and Coupon Amount

On January 15, 2010, the U.S. Treasury issued a five-year inflation-indexed note with a coupon of 3%. On the date of issue, the consumer price index (CPI) was 250. By January 15, 2015, the CPI had increased to 300. What principal and coupon payment was made on January 15, 2015?

Yield to Maturity / Yield to Call

10. BEA Industries has just issued a callable (at 102) ten-year, 8% coupon bond with semi-annual coupon payments. The bond can be called at 102 in three years or anytime thereafter on a coupon payment date. It has a current price of 99. What is the Yield to Maturity (YTM) on this bond? (Points: 2) 8.65% 8.15%

Coupon Redemptions & Estimated Liability

A Music Shop gives its customers coupons redeemable for a poster plus a Beyonce CD. One coupon is issued for each dollar of sales. On the surrender of 100 coupons and $5.00 cash, the poster and CD are given to the customer. It is estimated that 80% of the coupons will be presented for redemption. Sales for the first period were

General Electric

I need help on the follwing questions. Using the Internet, or other resources conduct research on the securities that you selected. Be sure to carefully examine the organizations' 10K and investment reports, general economic data, and Federal Reserve data. (at least 600 words). part a. The security or stock that i will b

The Morrissey Company

The Morrissey company's bonds mature in 7 years, have a par value of $1000, and make an annual coupon payment of $70. The market interest rate for the bond is 8.5%. what is the bond's price?

Debt financing for BEA Industries

BEA Industries has just issued a callable (at 102) ten-year, 8% coupon bond with semi-annual coupon payments. The bond can be called at 102 in three years or anytime thereafter on a coupon payment date. It has a current price of 99. What is the Yield to Maturity (YTM) on this bond and the Yield to Call (YTC) on this bond?

Debt financing for Boeing Corporation

Boeing Corporation has just issued a callable (at par) three-year, 5% coupon bond with semi-annual coupon payments. The bond can be called at par in two years or anytime thereafter on a coupon payment date. It has a price of $99. What is the bond yield to maturity (YTM) and yield to call (YTC)?

Advantages or disadvantages of using debt as a form of financing

1. Gray House is issuing bonds paying $110 annually that will mature ten years from today. The bond is currently selling for $970. The face value of the bonds is $1,000 Calculate: - a) Coupon Rate - b) Current Yield - c) Yield To Maturity 2. What are the advantages and disadvantages of using debt as a form of financing? P

Managerial finance for Rollins Corporation WACC

Rollins Corporation is estimating its WACC. Its target capital structure is 20 percent debt, 20 percent preferred stock, and 60 percent common equity. Its bonds have a 12 percent coupon, paid semiannually, a current maturity of 20 years, and sell for $1,000. The firm could sell, at par, $100 preferred stock which pays a 12 per

Determine the Fair Value of A Bond at Different Market Rates

Assume that Bond A represents a 10% annual coupon bond with 10 years to maturity, a face value of $1000, and a yield of 10%. Bond B represents a 10% annual coupon bond with five years to maturity, a face value of $1000, and also has a yield of 10%. Now, assume the yield on both bonds rises to 11%. On a percentage basis, which bo

Price of existing zero-coupon bonds

Assume the following information for existing zero-coupon bonds: Par value =$100,000 Maturity = 3 years Required rate of return by investors = 12% How much should investors be willing to pay for these bonds?

Calculate the Present Value of a bond at several different interest rates

Assume the following information for an existing bond that provides annual coupon payments: Par value = $1,000 Coupon rate = 11% Maturity = 4 years Required rate of return by investors = 11% a. What is the present value of the bond? b. If the required rate of return by investors were 14% instead of 11%, what would be the

Fed's increase in the money supply: effect to bond prices

Let's assume that bond market participants suddenly expect the Fed to substantially increase the money supply. a. Assuming no threat of inflation, how would bond price be affected by this expectation? b. Assuming that inflation may result, how would bond prices by affected? c. Given your answers to (a) and (b) explain why e

Cost of Equity and Debt for HD Industries

HD Industries data is as follows: - The firm's tax rate is 40% - The current price of HD's 12% coupon, semiannual payment, noncallable bonds wit 15 years remaining to maturity is $1,153.72. HD does not use short term interest bearing debt on a permanent basis. New bonds would be privately placed with no flotation cost. - Th

Yield Curve and Interest Rates

Explain the yield curve and how it reacts to changes in interest rates, and can you explain why long-term (30-year) bonds generally trade at a higher yield than short-term maturities. Apply the forces of inflation, monetary and fiscal policy, trade deficit and foreign influences in your explanation