Purchase Solution

Using Present Value Analysis Estimates

Not what you're looking for?

Ask Custom Question

1. Using present value analysis estimate the number of zero coupon bonds(each with a face value of $1000) that will have to be offered to provide the $1 million Laurinburg Precision Engineering needs for expansion, if investors seek a yield of 10%. Assume interest will compound on a semiannual basis over the life of the five year bond issue.

2.Assume that McKinnon and MacDougald decide to issue coupon bonds to finance the expansion of Laurinburg Precision Engineering. The terms of the $1,000 bonds due january 15, 2009, specify an interest rate of 10% with semiannual compounding of interest payments. However, Shelia Cox is able to find a group of investors who will accept a yield of 8% interest. how much will the investors be willing to pay for the 10% bonds?

3.If zero-coupon bonds with semiannual compounding to be due January 15,2009, are issued, what will be the amount due on that date if enough bonds are issued to provide $1 million on January 15, 2004, if the investors seek a yield of 8%?

4.How should Oliver MacKinnon and Beacham McDougald decide which bonds (the zero-coupon bonds or the 10% coupon bonds) to issue? What factors should they consider? Why?

Purchase this Solution

Solution Summary

The expert examines using present value analysis estimates.

Solution provided by:
Education
  • MBA, Indian Institute of Finance
  • Bsc, Madras University
Recent Feedback
  • "I've posted a similar question for another course. It's post 657940, and it's a practice problem that I'd like to use for the final exam. Your help will be greatly appreciated. "
  • "thank you!"
  • "Thank you again Jayant. You are super fast. "
  • "Thank you Jayant. You are appreciated. "
  • "Again, thank you Jayant. You are wonderful. "
Purchase this Solution


Free BrainMass Quizzes
Team Development Strategies

This quiz will assess your knowledge of team-building processes, learning styles, and leadership methods. Team development is essential to creating and maintaining high performing teams.

Transformational Leadership

This quiz covers the topic of transformational leadership. Specifically, this quiz covers the theories proposed by James MacGregor Burns and Bernard Bass. Students familiar with transformational leadership should easily be able to answer the questions detailed below.

Managing the Older Worker

This quiz will let you know some of the basics of dealing with older workers. This is increasingly important for managers and human resource workers as many countries are facing an increase in older people in the workforce

Operations Management

This quiz tests a student's knowledge about Operations Management

Employee Orientation

Test your knowledge of employee orientation with this fun and informative quiz. This quiz is meant for beginner and advanced students as well as professionals already working in the HR field.