10% R150 Debentures, 2.5 million issues. The debentures were issued one year ago and are redeemable in two instalments - half the amount at nominal value in two years' time and the other half at a premium of 5% after a further three years. The current market price for the debentures is R140 without interest. Flotation costs on new issues are negligible and are therefore considered to be irrelevant. Additional information: • The current capital structure based on market values is considered as optimal. • The company tax rate is 28% . calculate market value and cost of debentures

10% R150 Debentures, 2.5 million issues. The debentures were issued one year ago and are redeemable in two instalments - half the amount at nominal value in two years' time and the other half at a premium of 5% after a further three years. The current market price for the debentures is R140 without interest. Flotation costs on new issues are negligible and are therefore considered to be irrelevant. Additional information: • The current capital structure based on market values is considered as optimal. • The company tax rate is 28% . calculate market value and cost of debentures

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Similar questions

You will receive $8,000 in five years. When you receive it, you will invest it for 8 more years at an annual rate of 6%. How much money will you have 13 years from now? Question 7 options: 16,453 14,680 17,063 12,751 15,121
Please no written by hand solutions
What's the present value of $15,000 discounted back 5 years if the appropriate interest rate is 4.3%, compounded semiannually? Oa. $18,555.60 Ob. $9,845.74 Oc. $12,152.61 Od. $12,125.72 Oe. $13,486.50
4. ALDA Investments makes a sale of equipment for a value of L 250,000.00 where the cancellation is negotiated through 3 payments, which are paid 1, 2 and 3 months after the purchase, if a rate of 18% per year capitalizable per month is negotiated What is the value of the payments if: a)Each one is 15% larger than the previous one. b)The last two are equal to each other and the first is equal to the sum of the two.
4. The Atlas Machinery Corporation sells its equipment to contractors on either of the following arrangements: a) cash basis: payments of marked price less 10%; b) installment basis: down payment of 20% of the marked price and the balance payable in equal annual installments for the next 4 years. If you are the engineer buying a 7S Concrete Mixer which is marked at P250,000 and if money is worth 5% compounded annually, which of the following arrangements will you consider better from your standpoint? A) Pay P225,000 cash, or b) pay a down payment of P50,000 and pay the balance on equal installments of P50,000 annually for the next 4 years?
P3.2 M&B Tooling Ltd. is assessing two available options for the purchase of new equipment with a negotiated cash price of $100,000. The manufacturer is willing to accept a down payment of 20% of the purchase price and an instalment note for the balance. The note would require quarterly fixed principal payments (plus interest) starting October 1, 2020, for a period of two years. M&B has a proposal from its bank for an instalment loan for two years that requires a fixed blended monthly payment (including both principal and interest) starting August 1, 2020. The loan would be for 80% of the equipment's purchase price. The current market rate of interest is 8%. Both contracts have an interest rate of 8% b. Calculate the amount of the payments required of M&B under each alternative. Use either a financial calculator or Excel functions in your calculation
Darryl Company is a dealer in equipment. On January 1, 2008, Darryl Company sold an equipment with a cost of P3,500,000 in exchange for a noninterest bearing note of P5,000,000 requiring a lump sum payment at the end of 5 years. The market interest for similar notes was 8%. The relevant present value factors are:PV of 1 at 8% for 5 periods 0.68PV of an ordinary annuity of 1 at 8% for 5 periods 3.99PV of an annuity due of 1 at 8% for 5 periods 4.31 . What is the carrying amount of this note on January 1, 2008? A. 3,400,000 B. 3,990,000 C. 4,310,000 D. 5,000,000
PROBLEM 5 On January 1, 2021, Son Co. Company purchased a machine for 300,000 in exchange for a 4-year note. The prevailing note of interest of type is 10%. The new machine was damaged during installation and the repair cost amounted to 30,000. Assuming that the machine has an available cash price that equals to the present value of the note if the note is bears interest at 12% rate. Required: 1.) How much is the cost of the machine? 2.) How much is the interest expense for the year 2022? 3.) How much is the carrying value of the notes as of December 31, 2024?
A certain commodity can be bought in cash for $ 200,000.00. However, the agent allows to purchase the commodity in 9 equal payments, the first being due at the end of 10 year with an interest of 7.50% compounded continuously. a) Find the annual payments b) detemine the compound amount factor of the uniform payment series and the sinking fund factor.
Suppose that a party wanted to enter an FRA that expires in 121 days and is based on 56-day LIBOR. The dealer quotes a rate of 0.033 on the FRA. Assume that at expiration, the 56-day LIBOR is 0.028, and the notional amount is USD10,000,000. What is the payoff of the FRA short position? |-7744.05
PRAISEWORTHY Company is a dealer in equipment. On January 1, 2020, PRAISEWORTHY Company sold an equipment with a cost of P3,500,000 in exchange for a noninterest bearing note of P5,000,000 requiring a lump sum payment at the end of 5 years. The market interest for similar notes was 8%. The relevant present value factors are: PV of 1 at 8% for 5 periods 0.68 PV of an ordinary annuity of 1 at 8% for 5 periods 3.99 PV of an annuity due of 1 at 8% for 5 periods 4.31 What is the interest income to be recognized for the year ended December 31, 2020?
Happy Company sold a machine in exchange for a P750,000, 5-year, 14% note; interest is payable annually. How much is the total amount of interest collected for this note for 5 years? tart How much cash will be collected at the end of the term of the note? ssments ( Previous rences fessors

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