Glendale Corporation invests in perpetual bonds that promise an annual interest payment of $3.2 million. If the market interest rate is 4.5%, what is the present value of this investment?
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- Suppose that LilyMac Photography expects EBIT to be approximately $210,000 per year for the foreseeable future, and that it has 1,000 10-year, 9 percent annual coupon bonds outstanding. What would the appropriate tax rate be for use in the calculation of the debt component of LilyMac's WACC?(b) The total principal value of Clatterbridge Ltd bonds is $165 million, and the bonds have an annual coupon rate of 6 percent. The total cost of refunding would be 8 percent of the principal amount raised. The appropriate tax rate for the company is 30 percent. Assume the bonds were issued at par value and that coupons are paid annually. Required: How low does the market interest rate need to drop to justify refunding with a new bond issue?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
- A $1,000 face value bond issued by the Purud Company currently pays total annual interest of $80 per year and has a 13-year life. a-What is the present value, or worth, of this bond if investors are willing to accept a 10 percent annual rate of return on bonds of similar quality if the bond is a Eurobond? b-How would your answer in (a) change if the bond is a U.S. bond? c-How would your answer in (b) change if, one year from now, investors only required a 6 percent annual rate of return on bond investments similar in quality to the Purud bond? d-Suppose the original bond can be purchased for $925. What is the bond's yield to maturity?Suppose that LilyMac Photography expects EBIT to be approximately $ 210,000 per year for the foreseeable future, and that it has 1, 000 10-year, 9 percent annual coupon bonds outstanding. What would the appropriate tax rate be for use in the calculation of the debt component of Lily Mac's WACC?D4) Suppose NCKU company currently has NTD 10 million of five-year bonds with a coupon rate of 2%, a yield-to-maturity of 3.25% and a remaining life of two years and NTD 20 million of ten-year bonds with a coupon rate of 3.5%, a yield-to-maturity of 4.5% and a remaining life of three years. These two bonds pay coupons semi-annually. Assuming the settlement date is January 1, 2022. What is the portfolio modified duration of these two bonds using the Aggregate Cash Flow approach? years (Please round the answer to the nearest two decimal places)
- 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?PDQ, Inc. expects EBIT to be approximately $11.4 million per year for the foreseeable future, and it has 20,000 20-year, 10 percent annual coupon bonds outstanding. (Use Table 11.1.)What would the appropriate tax rate be for use in the calculation of the debt component of PDQ’s WACC? (Round your answer to 2 decimal places.)Today Melton Corporation's bonds sold for $1087.50. If the bond's annual coupon payment a is $75.00 , it matures in 20 years and the company has a tax rate of 25%, what is after tax cost to the firm of the funds raised through the sale of these bonds. Group of answer choices
- Assume that Beach Inc. has an issue of 20-year $1,000 par value bonds that pay 7% interest, annually. Further assume that today's required rate of return on these bonds is 5%. How much would these bonds sell for today?Pharoah Ltd. has issued bonds that never require the principal amount to be repaid to investors. Correspondingly, Pharoah must make interest payments into the infinite future. If the bondholders receive annual payments of $82 and the current price of the bonds is $820.00. What is the pre-tax cost of this debt? (Round answer to 2 decimal places, e.g. 15.25%.) Pre-tax cost of debt Type your answer here %A company has outstanding long-term bonds with a face value of $1,000, a 9% coupon rate, 20 yearsremaining until maturity, and a current market value of $1,132. If it pays interest annually, then what is itscost of debt?
