Imprudential, Incorporated, has an unfunded pension liability of $430,000 that must be paid in 10 years. To assess the value of the firm's stock, financial analysts want to discount this liability back to the present. If the relevant discount rate is 5.6 percent, what is the present value of this liability?
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- Harrington Enterprises’ has issued preferred stock, but its annual dividends will not begin until 7 years from now. The annual dividend is set at $10. If the discount rate is 6%, what should the current market price of Harrington be? please show all work step by stepCastle Company’s pension fund projected that a significant number of its employees would take advantage of a retirement program the company plans to offer in 10 years. Anticipating the need to fund these pensions, the firm bought zero coupon Government of Canada bonds maturing in 10 years. When these instruments were originally issued, they were 6% semiannual 30-year bonds. The stripped bonds are currently priced to yield 3.75%. Their total maturity value is $18,000,000. What is their total cost (price) to Castle today?XYZ Electronics Inc. is all equity financed and generates perpetual annual EBIT of $600. Assume that the EBIT, and all other cash flows, occur at year end and that we are currently at the beginning of a year. Assume that XYZ has a 100% payout rate, 5,000 shares outstanding, and that shareholders require a return of 5%. Assume that the tax rate is 0%. XYZ is considering an open market stock repurchase. It plans to buy 20% of its outstanding shares at the price of $4.00 per share. The repurchased shares will be cancelled. It will finance the repurchase by issuing perpetual bonds with a coupon rate (and yield) of 3%. Assume that the tax rate is 0%. If XYZ goes ahead with the repurchase, then what is the value of the company after the repurchase is complete?
- PLEASE GIVE ME THE CORRECT ANSWER 7)A pension plan is obligated to make disbursements of $1 million, $2 million, and $1 million at the end of each of the next three years, respectively. The annual interest rate is 10%. If the plan wants to fully fund and immunize its position, how much of its portfolio should it allocate to one-year zero-coupon bonds and perpetuities, respectively, if these are the only two assets funding the plan? Note: Do not round intermediate calculations. Round your answers to 2 decimal places. Portfolio Investment in one-year zero-coupon bonds % Investment in perpetuity % 15)Find the duration of a bond with settlement date May 27, 2023, and maturity date November 15, 2032. The coupon rate of the bond is 7%, and the bond pays coupons semiannually. The bond is selling at a yield to maturity of 8%. Note: Do not round intermediate calculations. Round your answers to 4 decimal places. Macaulay duration:????? Modified…Imprudentlal. Inc, has an unfunded penslon lablity of $415 milion that must be pald In 20 years. To assess the value of the firm's stock, financial analysts want to discount this liabllity back to the present. If the relevant discount rate is 5.2 percent, what Is the present value of this liabilty? (Do not round Intermediate calculations and enter your answer in dollars, not milions, rounded to 2 decimal places, e.g., 1,2344.56789) Present value 254,774,000.22Suppose that over the next year, one of three things could happen to a company's credit rating. It could remain investment grade, drop to non-investment grade or default. The value of a credit derivative that pays $100 in 1-year if the company's credit rating remain investment grade is $93. The value of a credit derivative that pays $200 in 1-year if the company's credit rating drops to non-investment grade is $7. The value of a credit derivative that pays $300 in 1-year if the company defaults is $6. Calculate the risk-free rate and the risk-neutral probability of default. (answers to 4 decimal places)
- My pension plan will pay me $10,500 once a year for a 10-year period. The first payment will come in exactly five years. The pension fund wants to immunize its position. Required: a. What is the duration of its obligation to me? The current interest rate is 5.0% per year. b. If the plan uses 5-year and 20-year zero-coupon bonds to construct the immunized position, how much money ought to be placed in each bond? c. What will be the face value of the holdings in each zero? Complete this question by entering your answers in the tabs below. Required A Required B Required C What is the duration of its obligation to me? The current interest rate is 5% per year. Note: Do not round intermediate calculations. Round your answer to 2 decimal places. Duration yearsI am not quite sure how to structure this question attached. I think that I start by calculating the Future Value of the stock and bond annuities, but I do not know exactly what to do with the withdrawal period part. What exactly is it asking in that part?Other relevant information about the company follows: The 20-year Treasury Bond rate is currently 4.5 percent and you have estimated market-risk premium to be 6.75 percent using the returns on stocks and Treasury bonds from 2010 to 2019. Pharmos Incorporated has a marginal tax rate of 25 percent. Required: Answer the following questions given the information above Calculate to the following for Pharmos considering its tax rate of 25%:i. Total Market Value for the Firmii. After-tax cost of Loan NO EXCEL SPREADSHEETS SHOW FULL WORKINGS WITHOUT EXCEL
- Required: A pension plan is obligated to make disbursements of $2.7 million, $3.7 million, and $2.7 million at the end of each of the next three years, respectively. The annual interest rate is 10%. If the plan wants to fully fund and immunize its position, how much of its portfolio should it allocate to one-year zero-coupon bonds and perpetuities, respectively, if these are the only two assets funding the plan? (Do not round intermediate calculations. Round your answers to 2 decimal places.) Investment in one-year zero-coupon bonds Investment in perpetuity Portfolio do do % %Suppose you can borrow and lend at the annual interest rate of 6% per annum. The IBM stock is trading at $200. It is not going to pay any dividend in one year. Use this information to answer the following three questions. 20. What is the fair forward price of a forward contract which calls for the delivery of 1 share of IBM stock at the end of one year? A. $216 B. $210 C. $214 D. $212 21. If the actual forward price Fa is $214, your arbitrage strategy is to A. buy one share of IBM, borrow $200, and sell the forward B. buy one share of IBM, borrow $212, and buy the forward C. short one share of IBM, lend $200, and buy the forward D. short one share of IBM, borrow $200, and sell the forward 22. At the end of one year, suppose IBM stock price is St, then the cash flow in the spot (stock) market is _, the cash flow in the forward contract is and the arbitrage profit is A. ST, 214- ST, 2 B. -St, ST-214, 2 C. -ST, 214-ST, 2 D. ST, ST-214, 2It is January 2023 and you are the CFO of Metrix Systems the firm does not reinvest any of its eamings it will expect to achieve Corp. The firm only 5 points Save Ansa pays dividends. The firm is expecting earnings per share (EPS) of $10 at the end of this year. If the same EPS of $10 each year in perpetuity. You are considering changing the dividend policy of the payout rate of 60% each year. The firm's return on new investment is 18% and its cost of equity capital (r) is 12%. Calculate the best one. firm. Specifically, you want the firm to target a the share price under the proposed payout policy. Select the best one $ 98.33 $166.67 $83.33 $223.33 $125