The June Bug has a $270,000 bond issue outstanding that matures in 22 years. These bonds have a 7.6 percent yield to maturity. The tax rate is 39 percent. What is the amount of the annual interest tax shield? Can you explain how to find annual coupon rate given the YTM?
Q: Month end contributions of $419 are made to an account for ten years. For exactly five years…
A: Monthly contribution$419Number of years of contribution10Interest rate with annual…
Q: A $1,000 par value bond has a current price of $913.09 and a maturity value of $1,000 and matures in…
A: Compound = Semiannually = 2Face Value = fv = $1000Current Price of Bond = pv = $913.09Time = t = 5 *…
Q: There are two stocks in the market, stock A and stock B. The price of stock A today is $69. The…
A: “Since you have posted a question with multiple sub-parts, we will solve first three sub-parts for…
Q: Which of the following is NOT an example of intermediate term debt? Answer Choices: a. 30-Month car…
A: An intermediate-term debt typically refers to a loan or debt obligation that falls between…
Q: During the class lecture we learned that the U.S. commercial paper market collapsed during the 2008…
A: Answer:During the 2008 financial crisis, the U.S. commercial paper market faced significant…
Q: what is the price of the call with the same strike and expiry?
A: An option is an agreement between two parties granting one the opportunity to purchase or sell a…
Q: hence you have to write your ansv This is a subjective 26-202 Calculate the IRR for a project having…
A: We can find out the range in which IRR lies by following this steps :Compute IRR factor. Now…
Q: What is the investor's annual return assuming no mezzanine loan? What is the investor's annual…
A: In financial terms, a loan is a sum of money that is borrowed from a lender with the agreement that…
Q: New ventures and a lot of SMEs risk losing their business operation in the name of 'finance gap'…
A: “Hi There, Thanks for posting the questions. As per our Q&A guidelines, must be answered only…
Q: $2,500 per month. She has the following monthly debt payment expenses: $75 for credit cards, $125…
A: FHA provides the guidelines for the how much should be monthly income and housing expenses should…
Q: AFW Industries has 211 million shares outstanding and expects earnings at the end of this year of…
A: Total dividends to be paid= $740 million x 0.64= $473.6 millionExpected dividend per share (D1)=…
Q: ently uses a six-year-old molding machine to manufacture silver picture frames. The company paid…
A: NPV is time value based method of capital budgeting and can be found as the difference in present…
Q: 2- I know that the expected HPR for a one-year investment on stock EMKA is 12%. According to our…
A: Expected HPR is calculated by following formula:-Expected HPR = whereP= probabilityHPR = holding…
Q: Chaquille's K-House, Inc. made an investment in a project with an initial cost of $10,729,236. This…
A: Net Present Value (NPV) is the difference between the present value of cash inflows and the present…
Q: Table 3-Returns on Investment Study Balance 100% Biology Task Biology Engineering 50% Biology…
A: To determine the returns on investment from a 50% biology and 50% engineering mix for on-the-job…
Q: Maggie's Resorts expansion project to increase the number of bungalows on its property had the…
A: NPV is calculated as the difference between the present value of cash inflow and cash outflow.. NPV…
Q: You are considering investing $800 in Higgs B. Technology Inc. You can buy common stock at $25.00…
A: A convertible bond comes with an option for the investor which allows him to convert the bonds into…
Q: 71 A finance charge Is derined as the: A) O total loan amount. B) base loan amount. C) dollar amount…
A: Fianace charge are the expences incurred over regular basis inculding interest expenses , fee,…
Q: The treasurer of Brandon Blue Sox is seeking a $29,000 loan for 180 days from the Brandon Credit…
A: Loan amount = $29,000Period = 180 daysStated interest rate = 12% p.a.Minimum balance =…
Q: at a biotechnology company. Janine estimates that she will need $943,000 in her total retirement…
A: The future value of an investment forecasts the expected value of an investment at a given future…
Q: Maggie's Resorts expansion project to increase the number of bungalows on its property had the…
A: NPV is also known as Net Present Value.. It is a capital budgeting technique which helps in decision…
Q: An audit plan for the examination of the retained earnings account should include a step that…
A: Audit Plan: Examination of Retained Earnings Account1. Verification of Market Value for Two-for-One…
Q: Price of the option today
A: A call option is a financial contract that gives the holder (buyer) the right, but not the…
Q: When using the two-stage dividend growth model,: Multiple Choiceg1 cannot be negative. Pt = Dt/R. g1…
A: Answer:In the two-stage dividend growth model, g1 must be greater than R.Therefore option D is…
Q: Suppose your parents have just retired and have $1 million in a retirement account. For how many…
A: The time value of money is the concept that money available today is worth more than the same amount…
Q: Kahn Inc. has a target capital structure of 60% common equity and 40% debt to fund its $11 billion…
A: Weight of Equity = we = 60%Weight of Debt = wd = 40%Assets = a = $11 billionWeighted Average Cost of…
Q: Financing a Growing Business Thalia, Georgia, and Fariyal started a cupcake business in their final…
A: “Hi There, thanks for posting the question. But as per Q&A guidelines, we must answer the first…
Q: XYZ's stock price and dividend history are as follows: Year Beginning-of-Year Price Dividend Paid at…
A: YearBeginning-of-Year PriceDividend paid at year-endAction2019$185.00$6.00Buy 3…
Q: Your company is considering taking on a new project that will cost $200,000. It is estimated that…
A: Net present value(NPV) is the difference between present value of all cash inflows and initial…
Q: Fill in the blanks for each of the following independent scenarios (A-D). Do not enter dollar signs…
A: In order to account for the time value of money, present value, or PV, is a concept in finance that…
Q: Sidman Products's common stock currently sells for $67 a share. The firm is expected to earn $7.37…
A: An investor who invests in stock receives a regular dividend or the dividend grows every year at the…
Q: Pendleton Products has a project requiring an initial cash investment of $3,100. The project is…
A: Discounted Payback Period refers to the period or duration within which the company is able to…
Q: A new production system for a factory is to be purchased and installed for $135331 . This system…
A: Initial investment = $135,331MARR = 15%Cost of electricity = $0.10 per kWhNumber of years = 6…
Q: Martin D. Martian Inc. is considering the purchase of a new argyle sock knitting machine to replace…
A: NINV is initial net investment for the project which is required at initial level of investment. It…
Q: uppose that you buy a 3-year coupon bond which sells at par. Its nominal value is £1,000 and its…
A: Bonds are one kind of investment in which interest is paid each period and par value of the bond is…
Q: Stan and Alicia can invest $40000 in preffered stock A which pay a dividend of $2000 a year, payable…
A: Holding period return is rate of return earned over the period and is the sum of dividend and…
Q: Resp d-What is the value of f in the follow 2 200 3 200 4 5 6 200 9 BAR OFFE*** 200 96 200 99 F=? M…
A: Future value of amount includes the amount of deposit done and amount of interest accumulated over…
Q: Suppose you are the human resource manager for a cellular phone company with 700 employees. Top…
A: Fringe BenefitsFringe benefits refer to additional perks or advantages that employees receive from…
Q: #8 A firm has two mutally exclusive investment Projects to evaluate. The projects have the following…
A: Equivalent annual cost is the cost of operating and maintaining an asset annually. It is also called…
Q: If you hire all three retail assistants to work on a 5 month project together, how much would you…
A: To calculate the budget for salary, we first find the cost (or salary) of five months of each retail…
Q: You see an opportunity to invest $1 million in a business. The investment is expected to generate…
A: Capital budgeting refers to the concept used for estimating the viability of the project through…
Q: When calculating Return on Investment (ROI) we take the benefit/cost x 100. Or as we reviewed in…
A: Return on Investment(ROI) refers to the rate of return earned on the investment.Return on…
Q: a. Calculate the price of a firm with a plowback ratio of 0.60 if its ROE is 20%. Current earnings…
A: Price of share can be found as the present value of dividends and present value of growth of…
Q: explain what is The current ratio with a comprehensive example.
A: The objective of this question is to understand the concept of the current ratio, which is a key…
Q: The Dauten Toy Corporation currently uses an injection molding machine that was purchased prior to…
A: The objective of this question is to calculate the Net Present Value (NPV) of the incremental cash…
Q: What is the NPV of the new plant? Assume that LC has a 23 percent tax rate. (Do not round…
A: Net Present Value (NPV) is a financial concept widely used in investment analysis and capital…
Q: recently offered $821,000 for the right to build an office building on the land. What is the value…
A: To value the real option, we can use a two-state model, where the building will either be…
Q: Royal Mount Games would like to invest in a division to develop software for video games. To…
A: Working Capital is shown the difference between current assets & current liabilties of the firm.…
Q: The expected return on the market is 12.07%, the risk-free rate is 4.94%, and the tax rate is…
A: Weighted average cost of capital (WACC):The weighted average cost of capital (WACC) is a financial…
Q: Case C - Awards evening The club committee are putting on an awards evening in the clubhouse. The…
A: “Since you have asked multiple question, we will solve the first question for you. If you want any…
The June Bug has a $270,000 bond issue outstanding that matures in 22 years. These bonds have a 7.6 percent yield to maturity. The tax rate is 39 percent. What is the amount of the annual interest tax shield?
Can you explain how to find annual coupon rate given the YTM?
Trending now
This is a popular solution!
Step by step
Solved in 3 steps with 2 images
- Enterprise, Inc. bonds have a 9 percent annual coupon rate. The interest is paid semiannually and the bond mature in eight years. Their par value is $1,000. If the market’s required yield to maturity on a comparable-risk bond is 8 percent, what is the value of the bond? What is its value if the interest is paid annually? How to calculate this using mathematical calculation with formulas in finance?You will receive $100 from a savings bond in 3 years. The nominal interest rate is 8%. a. What is the present value of the proceeds from the bond? b. If the inflation rate over the next few years is expected to be 3%, what will the real value of the $100 payoff be in terms of today's dollars? C. What is the real interest rate? d. Show that the real payoff from the bond [from part (b)] discounted at the real interest rate [from part (c)] gives the same present value for the bond as you found in part (a).If you buy municipal bond (tax free) that cost $1,000 and will pay a 4.7% coupon every year for the next 10 years (so the maturity date is in 10 years). At maturity the bond returns the original $1,000. If there is a 2.5% annual inflation, a) what real rate of return will you receive? b) How much real $ profit did you make from the bond?
- I would like to understand how to solve this in Excel. Hardware Inc. bonds are selling in the market for $960.45. These bonds carry a 9 percent coupon paid semiannually, and have 15 years remaining to maturity. What is the capital gain yield assuming that the interest rates will remain constant over the year?If a 5 year annual bond with a 6% coupon rate, currently priced at $988 and par value is $1000, what is the cost of debt before tax? For the question above, if the tax rate is 30%, how much is the after tax cost of debt?FYI bonds pay $40 in interest every six months and will mature in 10 years. a. Calculate the price if the yield to maturity on the bonds is 7, 8, and 9 percent, respectively. b. Explain the impact on price if the required rate of return decreases.
- Suppose Ford Motor Company issues a five year bond with a face value of $5,000 that pays an annual coupon payment of $150. a. What is the interest rate Ford is paying on the borrowed funds? b. Suppose the market interest rate rises from 3% to 4% a year after Ford issues the bonds. Will the value of the bond increase or decrease?A 10-year government bond has a face value of £100 and an annual coupon rate of 5%. Assume that the interest rate is equal to 6% per year. (a) Calculate the bond’s present value if it pays the interest annually, and also the present value if it pays semi-annually. (b) Calculate the market price of the bond when the interest rate changes to 8% please explain it on a paper with formula, not by excel.Suppose a State of Califomla bond will pay 1,000 eight years from now. If the going interest rate on these 8 year bonds is 6.0% how much is the bond worth today?
- Jennifer Davis is planning to buy 10-year zero-coupon bonds issued by the u.s. treasury. if these bonds have a face value of $1000 and are currently selling at $410.63, what is the effective annual yield? assume that interest compounds semiannually on similar coupon-paying bonds. round answer to 5 decimal places.Suppose that a 5-year 6% bond is purchased between the issuance date and the first coupon date. The days between the settlement date and the next coupon period is 60. There are 90 days in the coupon period given that the coupons are paid quarterly. Suppose the discount rate is 4%. What is the dirty price, clean price, and accrued interest?Suppose Home Depot issues 30-year bonds on which it pays a 4.00% (nominal) interest rate. Further, suppose that both Home Depot and the purchasers of its bonds anticipate inflation will average 2.00% during the life of the loan. Now suppose the inflation rate after the loan is made (i.e. after the bond is purchased) is actually 1.00% per annum. It follows that the actual real rate of interest is and, ceteris paribus, are (is) better off than anticipated as a result of the difference between the anticipated and the actual rate of inflation. Select one: a. 2.00%, Bondholders b. 2.00%, Home Depot O c. 3.00%, Bondholders d. 3.00%, Home Depot