Assets, Incorporated, plans to issue $6 million of bonds with a coupon rate of 7.4 percent, a par value of $1,000, semiannual coupons, and 20 years to maturity. The current market interest rate on these bonds is 6.9 percent. In one year, the interest rate on the bonds will be either 9 percent or 5 percent with equal probability. Assume investors are risk-neutral. a. If the bonds are noncallable, what is the price of the bonds today? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Answer is complete but not entirely correct. 1,060.00 Price of the bonds b. If the bonds are callable one year from today at $1,090, will their price be greater or less than the price you computed in part (a)? Greater $ O Lesser

Katle Pairy Fruits Incorporated has a $2,400 16-year bond outstanding with a nominal yield of 17 percent (coupon equals 17% × $2,400 = $408 per year). Assume that the current market required interest rate on similar bonds is now only 12 percent. Use Appendix B and Appendix D for an approximate answer but calculate your final answer using the formula and financial calculator methods. a. Compute the current price of the bond. Note: Do not round Intermediate calculations. Round your final answer to 2 decimal places. Assume Interest payments are annual. Current price of the bond b. Find the present value of 5 percent × $2,400 (or $120) for 16 years at 12 percent. The $120 is assumed to be an annual payment. Add this value to $2,400. Note: Do not round Intermediate calculations. Round your final answer to 2 decimal places. Assume Interest payments are annual. Present value

Sandhill Company is issuing eight-year bonds with a coupon rate of 6.8 percent and semiannual coupon payments. If the current market rate for similar bonds is 10 percent. Assume face value is $1,000. What will the bond price be? (Round intermediate calculations to 5 decimal places, e.g. 1.25145 and bond price to 2 decimal places, e.g. 15.25.) Bond price $ If company management wants to raise $1.25 million, how many bonds does the firm have to sell? (Round intermediate calculations to 5 decimal places, e.g. 1.25145 and number of bonds to O decimal places, e.g. 5,275.) Number of bonds

(Related to Checkpoint 9.3) (Bond valuation) Pybus, Inc. is considering issuing bonds that will mature in 20 years with an annual coupon rate of 11 percent. Their par value will be $1,000, and the interest will be paid semiannually. Pybus is hoping to get a AA rating on its bonds and, if it does, the yield to maturity on similar AA bonds is 9.5 percent. However, Pybus is not sure whether the new bonds will receive a AA rating. If they receive an A rating, the yield to maturity on similar A bonds is 10.5 percent. What will be the price of these bonds if they receive either an A or a AA rating? a. The price of the Pybus bonds if they receive a AA rating will be $ (Round to the nearest cent)

(Related to Checkpoint 9.3) (Bond valuation) Pybus, Inc. is considering issuing bonds that will mature in 24 years with an annual coupon rate of 9 percent. Their par value will be $1,000, and the interest will be paid semiannually. Pybus is hoping to get a AA rating on its bonds and, if it does, the yield to maturity on similar AA bonds is 12 percent. However, Pybus is not sure whether the new bonds will receive a AA rating. If they receive an A rating, the yield to maturity on similar A bonds is 13 percent. What will be the price of these bonds if they receive either an A or a AA rating? a. The price of the Pybus bonds if they receive a AA rating will be $ (Round to the nearest cent.)

​(Related to Checkpoint​ 9.3)  ​(Bond valuation)  ​Pybus, Inc. is considering issuing bonds that will mature in 25 years with an annual coupon rate of 8 percent. Their par value will be ​$1,000​, and the interest will be paid semiannually. Pybus is hoping to get a AA rating on its bonds​ and, if it​ does, the yield to maturity on similar AA bonds is 9.5 percent. ​ However, Pybus is not sure whether the new bonds will receive a AA rating. If they receive an A​ rating, the yield to maturity on similar A bonds is 10.5 percent. What will be the price of these bonds if they receive either an A or a AA​ rating?       Question content area bottom Part 1 a. The price of the Pybus bonds if they receive a AA rating will be ​$enter your response here. ​ (Round to the nearest​ cent.)

KIC Inc. plans to issue $7.2 million of bonds with a coupon rate of 16 percent paid semiannually and 36 years to maturity. The current one-year market interest rate on these bonds is 15 percent. In one year, the interest rate on the bonds will be either 18 percent or 9 percent with equal probability. Assume investors are risk neutral. a. If the bonds are non-callable, what is the price of the bonds today? (Do not round Intermediate calculations. Enter the answer in dollars. Round the final answer to 2 decimal places. Omit $ sign in your response.) Price of the bonds $ $3,799,246.63 b. If the bonds are callable one year from today at $1,575, will their price be greater or less than the price you computed in part (a)? Greater than Less than c. If the bonds are callable one year from today at $1,575, what is the current price of the bond? (Do not round Intermediate calculations. Enter the answer in dollars. Round the final answer to 2 decimal places. Omit $ sign in your response.) Current…

Bearcat Corporation is offering bonds to the market with a coupon of 15 percent. The bonds make semiannual payments and currently have a yield to maturity of 11.78 percent. The bonds will mature in 14 years and have a face value of $1,000. What should be the current market price of each bond? O $815.67 O $1,215.85 O $652.75 О $1,218.29 O $1,150.67

Airborne Airlines Inc. has a $1,000 par value bond outstanding with 20 years to maturity. The bond carries an annual interest payment of $100 and is currently selling for $900. Airborne is in a 25 percent tax bracket. The firm wishes to know what the aftertax cost of a new bond issue is likely to be. The yield to maturity on the new issue will be the same as the yield to maturity on the old issue because the risk and maturity date will be similar. a. Compute the yield to maturity on the old issue and use this as the yield for the new issue. Yield on new issue :

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