Explore BrainMass

Explore BrainMass

    Bond Valuation

    BrainMass Solutions Available for Instant Download

    Duration of a 6% coupon bond

    Find the duration of a 6% coupon bond making annual coupon payments if it has three years until maturity and a yield to maturity of 6%. What is the duration if the yield to maturity is 10%?

    Dividend Valuation Model, Convertibles, Warrants

    Dividends, Retain Earnings, Yield 1. Springsteen Music Company earned $820 million last year and paid out 20 percent of earnings in dividends. By how much did the company's retained earnings increase? With 100 million shares outstanding and a stock price of $50, what was the dividend yield? (Hint: First compute dividends pe

    Need help figuring out the following Bonds Payable

    On April 1, 2003, Tatum Corporation issued $900,000 of 4-year, 8% bonds at face value plus accrued interest. The bonds were dated February 1, 2003, and pay interest semiannually on August 1 and February 1. Instructions Prepare all entries relating to the bond issue from the date of sale through the year end on December 31, 2

    Difference Between the carrying value and Current Market Value

    Explain why there is a difference between the carrying value and the current market value of the long-term debt. Assume the company has decided to retire all of its long-term debt for cash, prepare the journal entry to record this transaction. See the attached file.

    Bond price and yield

    Company A issued bonds at face value at a yield to maturity of 7%. With 8 years left to maturity, the company has troubles and yield to maturity on the bonds is up to 15%. What happened to the bond price? If the company can meet its coupon payments but expected to go bankrupt when the bond matures, and investors expect to r

    Financial Analysis

    1 Calculate the NPV and the IRR for the following project and state whether or not you would accept the new project. Required rate of return = 9% Current prime rate = 11% Initial outflow = $75,000 Inflows = $25,000 for years 1-3

    Bond prices and yields

    5.17 bond sold for $1,065.12. the bond life is 9 years, yeild to maturity is 7 percent, what is the coupon rate? my answers 6.0 5.18 a. several years ago bonds were issued at face value yeild to maturity of 7 percent. with 8 years left until maturity company hits hard times. yield to maturity increases to 15%. what happ

    Price of the bond

    A firm wants to issue a 5 year bond with a coupon rate of 8% yield to maturity of 6%, and interest payments made semi-annually. 1) At what price will the firm be able to sell the bond? 2) How many bonds must the firm sell to raise $1,000,000 in capital?

    Bond Value and Bond Value

    The CFO invests in a stock that will pay dividends of $2.00 at the end of the first year; $2.20 at the end of the second year; and $2.40 at the end of the third year. Also, he believes that at the end of the third year he will be able to sell the stock for $33. What is the present value of all future benefits if a discount rate

    Coupon rate

    Question: Large Industries bonds sell for $1,065.15. The bond life is 9 years, and the yield to maturity is 7 percent. What must be the coupon rate on the bonds? Please show work.

    Various external financing alternatives

    Provide a DETAILED presentation of the characteristics of the various EXTERNAL financing alternatives, including the advantages and disadvantages of each. Include a recommendation of which alternative (or combination of alternatives) should be used to finance the investment. Thanks for getting me started!!

    Bond carrying value

    Hooker Company sells $200,000 of ten-year, 8% bonds to yield 10% on January 1, 2005. The bonds pay interest annually on December 31. The bonds were sold at a discount of $24,578. The bond carrying value at the end of 2006 is

    The bond interest expense for 2005 is...

    Hooker Company sells $200,000 of ten-year, 8% bonds to yield 10% on January 1, 2005. The bonds pay interest annually on December 31. The bonds were sold at a discount of $24,578. The bond interest expense for 2005 is

    Pre-tax cost of debt

    Wilson's Cabinet has bonds outstanding that mature in eight years, have a 6 percent coupon and pay interest annually. These bonds have a face value of $1,000 and a current market price of $1,020. What is the company's pre-tax cost of debt?

    Finance

    (See attached file for full problem description) --- 37. Amortizing Loan. Consider a 4-year amortizing loan. You borrow $1,000 initially, and repay it in four equal annual year-end payments. If the interest rate is 8 percent, show that the annual payment is $301.92 Fill in the following table, which shows how much of

    Calculating issue price and interest expense

    Zero coupon bonds pay no interest. The only cash investors receive is the lump-sum principle payment at maturity. On January 1, 2005 The Ledge Inc. issued $250 million of zero coupon bonds at a market yield rate of 12%. The bonds mature in 20 years. Required 1. What was the January 1, 2005 issue price of these zero coupon

    Bond prices and interest rates: the relationship

    Discuss the relationship between interest rates and bond prices? When must the yield to maturity of a bond equal the current yield? What makes some bonds sell at a premium while others sell at a discount? Discuss how to use the tables to determine Present and Future Values, or Present Value and Future Annuities.

    Bond Pricing

    Hi, I cannot figure out how to answer the following (# 5). I take it I am supposed to answer # 4 to calculate # 5. # 5. Bond Pricing. If Circular File (see question 4) wants to issue a new 6-year bond at face value, what coupon rate must the bond offer? # 4. Bond Pricing. A 6-year Circular File bond pays interest of $80 a

    Value of a bond

    What internal and external factors alter the value of a bond?

    Return on equity could explain investors' willingness to pay

    Reedsburg Associates is currently paying a dividend of $ 0.40 per share on earnings of $ 4 per share. Its stock is selling for $200 per share. Stocks of similar risk are priced to return 15%. What kind of return on equity could explain investors' willingness to pay a price equal to 50 times earnings on this stock?

    Bonds and yields

    Q1. An 8 percent annual coupon, noncallable bond has ten years until it matures and a yield to maturity of 9.1 percent. What should be the price of a 10-year noncallable bond of equal risk which pays an 8 percent semiannual coupon? Assume both bonds have a par value of $1,000. Q2. Oakdale Furniture Inc. has a beta coefficie

    Implied Value of the Warrants Attached Bonds

    Gregg Company recently issued two types of bonds. The first issue consisted of 20-year straight debt with an 8 percent annual coupon. The second issue consisted of 20-year bonds with a 6 percent annual coupon and attached warrants. Both issues sold at their $1000 par values. What is the implied value of the warrants attached to

    Bonds/Percents/Stocks

    Midland Oil has $1,000 par value bonds outstanding at 11 percent interest. The bonds will mature in 25 years. Compute the current price of the bonds if the present yield to maturity is: a) 6 percent b) 8 percent c) 12 percent Harrison Ford Aoto Company has a $1,000 par value bond outstanding that pays 11

    Require a default risk premium of about 3%

    Uncle Sal, the family accountant is home from his failed attempt at striking it rich in Vegas and wants to make up for it by selling a few securities on the side. He has an offer that he is pitching to an older lady he calls "Granny." The offer is for a 30 year bond issued by an insurance company and paying 7% annual interest.

    What is the price of a bond that matures in ten years

    What is the price of a bond that matures in ten years, has a face value of 1,000 dollars (the principal to be repaid at the end of ten years) and a coupon rate of 7 percent and a current yield of 10 percent. Interest payments are semi-annual.

    Advantages and Disadvantages of Issuing a Long-Term Bond

    Since a corporation often has the right to call bonds at will, do you believe individuals should be able to demand repayment at any time they so desire? What are the relative advantages and disadvantages of issuing a long-term bond during a recession versus during a period of prosperity? What are the relative advantages an

    What is the forward price of your contract? Suppose both of the spot rates unexpectedly shift downward by 1 percent. What is the price of a forward contract otherwise identical to yours?

    You enter into a forward contract to buy a 5 yr, zero coupon bond that will be issued in one year. The face value of the bond is 2,000, and the 1 year and 10 year spot interest rates are 2 percent per annum a 6 percent per annum. Both of these interest rates are expressed as effective annual yields. What is the forward price

    Present Value problems

    Present Values. Compute the present value of a $100 cash flow for the following combinations of discount rates and times: a. r = 8 percent. t = 10 years. b. r = 8 percent. t = 20 years. c. r = 4 percent. t = 10 years. d. r = 4 percent. t = 20 years. Future Values. Compute the future value of a $100 cash flow for the sa

    ADVERTISEMENT