Lowell Corporation recently issued 10-year bonds at a price of $1,000 with a 8 percent semi-annual coupon at par. Now it wishes to issue new 10 year bonds with 2 percent semi-annual coupon with a face value of $1,000. If both bonds have the same yield-to-maturity, how many new bonds must Lowell issue to raise $3,000,000 cash?
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Lowell Corporation recently issued 10-year bonds at a price of $1,000 with a 8 percent semi-annual coupon at par. Now it wishes to issue new 10 year bonds with 2 percent semi-annual coupon with a face value of $1,000. If both bonds have the same yield-to-maturity, how many new bonds must Lowell issue to raise $3,000,000 cash?
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- The Moonlight Mile Corporation wants to issue $1,000,000 of new bonds. Their bonds will have a coupon rate of 8% paid semiannually, will have 30 years to maturity, will have a par value of $1,000, and have a yield to maturity of 7%. How many bonds should Moonlight Mile sell in order to raise $1,000,000KIC 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…Assets, Inc., plans to issue $8 million of bonds with a coupon rate of 7 percent, a par value of $1,000, semiannual coupons, and 15 years to maturity. The current market interest rate on these bonds is 10 percent. In one year, the interest rate on the bonds will be either 8 percent or 4 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.) Price of the bonds
- Assets, Inc., plans to issue $5 million of bonds with a coupon rate of 7 percent, a par value of $1,000, semiannual coupons, and 30 years to maturity. The current market interest rate on these bonds is 6 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? b.If the bonds are callable one year from today at $1,080, will their price be greater or less than the price you computed in (a)? Why? please show all work.Global Products plans to issue long-term bonds to raise funds to finance its growth. The company has existing bonds that are similar to the bonds it expects to issue. The existing bonds have a face value of $1000, mature in 10 years, pay $60 interest coupon annually, and are currently selling for $1077 each. (Therefore, the current YTM on the bonds is 5 percent.) Assume that Global will issue the new bonds at an interest rate cost of 5 percent based on the current YTM on its existing bonds. Global's marginal tax rate is 40%. What is the after-tax cost of debt?Assets, Inc., plans to issue $8 million of bonds with a coupon rate of 11 percent, a par value of $1,000, semiannual coupons, and 20 years to maturity. The current market interest rate on these bonds is 10 percent. In one year, the interest rate on the bonds will be either 12 percent or 8 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.)
- Thatcher Corporation’s bonds will mature in 10 years. The bonds have a face value of $1,000 and an 8 percent coupon rate, paid semiannually. The price of the bond is $1,100. What is the firm’s cost (percentage rate) of borrowing money under these market conditions?U.S. Delay Corporation, a subsidiary of the postal service, must decide whether to issue zero coupon bonds or quarterly payment bonds to fund construction of new facilities. The $1,000 par value quarterly payment bonds would sell at $795.54, have a 4.50% coupon rate, and mature in 10 years. At what price would the zero coupon bonds with a maturity of 10 years have to sell to earn the same effective annual rate (or bond yield) as the quarterly payment bonds?Assets, Ic., plans to issue $6 million of bonds with a coupon rate of 11 percent, a par value of $1,000, semiannual coupons, and 15 years to maturity. The current market interest rate on these bonds is 8 percent. In one year, the interest rate on the bonds will be either 12 percent or 8 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.) Price of the bonds b. If the bonds are callable one year from today at $1,060, will their price be greater or less than the price you computed in part (a)? O Greater O Lesser
- Assets, Incorporated, plans to issue $8 million of bonds with a coupon rate of 7.1 percent, a par value of $1,000, semiannual coupons, and 20 years to maturity. The current market interest rate on these bonds is 6.6 percent. In one year, the interest rate on the bonds will be either 9 percent or 4 percent with equal probability. Assume investors are risk-neutral. If the bonds are noncallable, what is the price of the bonds today?To help finance a major expansion, GAMA Company sold a bond with 20 years to maturity. This bond has a 9.25% annual coupon, paid semiannually, sells at a price of $1,075, and has a par value of $1,000. What is the component cost of debt for use in the WACC calculation? Show work in excel and explain answerHMK Enterprises would like to raise $10.0 million to invest in capital expenditures. The company plans to issue five-year bonds with a face value of $1,000 and a coupon rate of 6.50% (annual payments). The following table summarizes the yield to maturity for five-year (annual-payment) coupon corporate bonds of various ratings a. Assuming the bonds will be rated AA, what will be the price of the bonds? b. How much of the total principal amount of these bonds must HMK issue to raise $10.0 million today, assuming the bonds are AA rated? (Because HMK cannot issue a fraction of a bond assume that all fractions are rounded to the nearest whole number) c. What must be the rating of the bonds for them to sell at par? d. Suppose that when the bonds are issued, the price of each bond is $902.79 What is the likely rating of the bonds? Are they junk bonds? a. Assuming the bonds will be rated AA, what will be the price of the bonds? The price of the bonds will be $ (Round to the nearest cent.) Data…