In what sense is subordinated debt advantageous to senior debtholders, and in what sense is it disadvantageous to them?
What trait is commonly found in debt contracts? 1-seniority 2-covenants 3-callability 4-all of the above
1) Assume investors expect a 2.0 percent real rate of return over the next year. If the inflation is expected to be 0.5 percent, what is the expected nominal interest rate for a one-year U.S. Treasury security? 2) A thirty-year U.S. Treasury bond has a 4.0 percent interest rate. In contrast, a ten-year Treasury bond has an in
Describe the factors that have influenced your interest in studying business.
Research and identify the current levels of the real and nominal GDP, the unemployment rate, the inflation rate and the key interest rate. Relate these variables to the current state of the economy. What is the forecast for these variables for the next 1-2 years? Choose a company that you are familiar with or that you work for a
On August 1, 201, Colombo, Co's treasurer signed a note promising to pay $240,000 on December 31, 2010. The proceeds of the note were $232,000. Calculate the effective interest rate (APR) on the loan.
Lisa wants to retire on $56,000 per year forever. She estimates that her retirement account will earn 8.4% compounded annually. Lisa will make monthly payments into her account for the next 25 years which her company will match dollar for dollar. How much should the monthly payments be? (Hint) What balance is needed to earn $
Create a presentation (9-12 slides) for the Board which examines the current state of the U.S. economy. Focus on four key economic metrics: Gross Domestic Product (GDP), unemployment, inflation, and interest rates. In addition, discuss the state of the economy and political landscape for the largest economies in each of the thre
See the attached file. 1.(Weighted average cost of capital) The Target capital structure for QM Industries is 37% common Equity for the firm is 17.6%, the cost of preferred stock is 10.8%, the before-tax cost of debt is 7.2%, and the firm's tax rate is 35%, what is QM's weighted average cost of capital? QM's WACC is _____% (
Jack has a balance of $1276.53 on a credit card with an annual percentage rate of 15.2%. The minimum payment required on the current statement is $26. Find the amount applied to reduce the principal in this statement. Show work.
D. Lawrance designs and manufactures fashionable mens clothing. For the coming year the company has scheduled production of 40,000 suede jackets. Budgeted costs for this product are as follows: Unit Costs Total
Debt is the term associated with money you owe another party. What is the difference between an expense and a debt? (Give several examples)
What is the term structure of interest rates, and what are its three facts? 200 words in length
1.) Explain the process to calculate external funding needs and the importance to a business. 2.) Define the flow of funds model provided in this unit, explain each component and how funds flow from savers to producers. 3.) Explain the importance of interest rates, and how risk is considered to businesses and economic acti
Computatrix, a computer retailer, sells a new computer to Davina on credit. Davina buys the computer for her personal, home use. Computatrix attaches a security interest on the computer but does not file. Shortly thereafter, Davina sells the computer to Boulder for $2,000. Boulder buys the computer for his own personal, househol
Using the following website: http://www.bondsonline.com/Todays_Market/Corporate_Bond_Spreads.php put together a table of interest rates for a company with a AAA rating, BB rating and a junk rating. - Discuss which interest rates should be used for an asset which is 1 year in length, 5 years in length, 15 years in length and 3
Generating a letter of interest for sorority can be essential for many college bound students. In this response, please review some essential questions that one must ask before they start to write their letter.
Please see the attachment for the problems. Problem 1 a) Compute the future value of $1000 at 10% compounded annually for 6 years. b) Compute the present value of $1000 due in 4 years at 15%, compounded semiannually. Problem 2 a) Compute the future value of a 9%, 5-year ordinary annuity that pays $600 each year. b) Ass
Kose, Inc., has a target debt-equity ratio of 0.74. Its WACC is 12 percent, and the tax rate is 35 percent. 1.) If Kose's cost of equity is 14.5 percent, what is its pretax cost of debt? (Do not include the percent sign (%). Round your answer to 2 decimal places. (e.g., 32.16)) 2.) If instead you know that the aftertax co
Presented are two independent situation. 1. On Jan 1,2012 Drake Company issued 300,000 of 9% 10-year bonds at par. Interest is payable quarterly on Apr1,Jul 1,Oct 1, and Jan1. 2. On Jun 1,2012 Vince Company issued 200,000 of 12% 10-year bonds dated Jan 1 at par.plus accured interest. Interest is payable semiannually on July
1. Discuss the Yield Curve and its usefulness in predicting recessions. Did the Yield Curve from 2004 through 2007 predict the Great Recession of 2008-2010? Based on the current Yield Curve, detail your prediction for the U.S. economy for the next two years. 2. Discuss ways in which an investor can take advantage of a flat o
A. Nintendo Corporation issued $ 10 million of 3.375 % coupon bonds 10 years ago with a 30 year maturity. Each bond has a par value of $ 1,000, and they are callable at 104 % of par value. Flotation costs were 0.5 %, and the bonds were initially sold at par. However the interest rate is currently 6.175% for 20 year bonds, and NC
If a certain city had six tax-supported bond issues and three special assessment bond issues outstanding, it would be preferable to operating nine separate debt service funds or, at a minimum, one debt service fund for tax supported bonds and one for special assessment bonds?" Do you agree? Explain.
Saturn issues 6.5%, five-years bonds dated January 1, 2011, with a $500,000 par value. The bonds pay interest on June 30 and December 31 and are issued at a price of $510,666. The annual market rate is 6% on the issue date. (Effective interest amortizatoin of bond premium computing bond price) 1. Compute the total bond inter
Calculate the after-tax cost of debt for the Wallace Clinic, a for-profit healthcare provider, assuming that the coupon rate set on its debt is 11 percent and its tax rate is either: a. 0 percent b. 20 percent c. 40 percent
Assume Venture Healthcare sold bonds that have a ten-year maturity, a 12 percent coupon rate with annual payments, and a $1,000 par value. a. Suppose that two years after the bonds were issued, the required interest rate fell to 7 percent. What would be the bond's value? b. Suppose that two years after the bo
Recommend three policy changes that would make the Federal Reserve's job of controlling U.S. interest rates easier. Explain your reasoning.
On January 1, 2013, King Corporation acquired for $750,000 of 10% bonds, paying $705,186. The bonds mature January 1, 2024; interest is payable each July 1 and January 1. The discount of $44,814 provides an effective yield of 11%. King Corporation uses the effective-interest method and plans to hold these bonds to maturity. On J
Compare the overviews from the following two articles to analyse whether inflation or deflation is more likely in the next two years. 1. Krugman, P. (May 3, 2009) Falling Wage Syndrome. New York Times. Retrieved May, 2009 from: http://www.nytimes.com/2009/05/04/opinion/04krugman.html?_r=1 2. Meltzer, A.. (May 3, 2009) Inf
Your firm has debt worth 200,000, with a yield of 9%, and equity worth $300,000. It is growing at a 5% rate, and its tax rate is 40%. A similar firm with no debt has a cost equity of 12%. What is the value of the firm according to MM with corporate taxes? A) $475,875 B) $528,750 C) $587,500 D) $646,250 E) $710,875