Occam Industrial Machines issued 188,000 zero coupon bonds 8 years ago. The bonds originally had 30 years to maturity with a yield to maturity of 6.6 percent. Interest rates have recently decreased, and the bonds now have a yield to maturity of 5.7 percent. The bonds have a par value of $2,000 and semiannual compounding. If the company has a $89 million market value of equity, what weight should it use for debt when calculating the cost of capital? Note: Do not round intermediate calculations and round your answer to 4 decimal places, e.g., .1616.

Q: JP Smith, Inc has an outstanding bond issue, which has eight years remaining to maturity and a…

A: Par value = $ 1000 Coupon rate = 4.250% Semi annual coupon amount = 1000*0.0425*1/2 = $ 21.25 Years…

Q: Fortune Inc. has a pure discount bond issue with a face value of $1,000 that matures in 1 year. The…

A: A pure discount bond, also known as a zero-coupon bond, is a debt security that pays no periodic…

Q: Leggio Corporation issued 20-year, 7% annual coupon bonds at their par value of $1,000 one year ago.…

A: Par Value = $ 1000 Coupon Rate = 7% Coupon Amount =1000*7% = 70 Market Interest rate= 6% Years to…

Q: In December 2010, LoloLimon issued $100 million in bonds. These bonds originally had a 25 year…

A: Bonds refer to the instruments used by companies to raise debt capital from non-traditional sources.…

Q: Aspen Company's non-callable bonds currently sell for $995. They have a 15-year maturity, an annual…

A: Yield to Maturity (YTM) is the expected overall return. YTM considers the bond's current market…

Q: RMB, Inc. sold a 20-year bond at par 12 years ago. The bond pays an 8% annual coupon, has a $1,000…

A: Given that;Face value is $1000Present value is $893.30

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A: Here, Value of Bond is $1,000 Coupon Rate is 9.50% Compounding Period is Semi Annual Selling Price…

Q: Ashburn Corporation issued 15-year bonds 2 years ago at a coupon rate of 8.8 percent. The bonds make…

A: Bonds refer to instruments that are issued for raising debt capital for the issuer from…

Q: Too Young, Incorporated, has a bond outstanding with a coupon rate of 6.2 percent and semiannual…

A: Compound = Semiannually = 2Coupon Rate = 6.2 / 2 = 3.1%Price of Bond = pv = $1954Time = nper = 22 *…

Q: Years ago, Bustle Company sold a $1,000 par value bond that now has 25 years to maturity and an…

A: A bond is a kind of debt security issued by the government and private companies to the public for…

Q: You are analyzing the cost of debt for a firm. You know that the firm’s 14-year maturity, 7.4…

A: Solution- Face Value = $1,000  Current Price = $769.21  Annual Coupon Rate = 7.4%  Semiannual Coupon…

Q: Vijay

A: Step 1: The weight of debt is the market value of debt divided by total value of the firm.  To…

Q: Several years ago the Jakob Company sold a $1,000 par value, noncallable bond that now has 20 years…

A: Here,Par Value of Bond $ 1,000.00Annual Time Period20Coupon Rate in %7%Current Price of Bond $…

Q: Telex, Inc. needs to raise $20 million by issuing bonds. It plans to issue a $1000 par value bond…

A: Solution:Number of bonds to be issued by Telex Inc.  will be calculated by the division of funds to…

Q: dams Enterprises' noncallable bonds currently sell for $912. They have a 11-year maturity, an annual…

A: GIVEN, price = $912 n =11 Coupon = $76 par = $1000

Q: Hydro Systems has bonds outstanding with a face value of $1,000, 13 years to maturity, and a coupon…

A: PV of bond= Coupon*(1-(1+r)-n)/r +FV /(1+r)nCoupon=1000*6.5% /2=$32.5n=13*2=26 semi-annual…

Q: Suppose a firm is issuing 10,000 bonds. Each bond has a face amount of $950, a stated rate of 7.5%,…

A: According to bartleby guidelines , if question involves multiple sub parts , then 1st sub 3 parts…

Q: Garrison's company issued a $1000.00, 20 yr semi-annual bond 5 years ago, with a coupon rate of 5%.…

A: First we need to calculate bond price by using equation below. Bond price will the sum of present…

Q: Augustine Company's stock has 47 million shares outstanding and a current market price of $50. Its…

A: Number of Stock = n = 47 million Market price of stock = ps = $50 Market Value of debt = d = $245…

Q: A company issued $30 million of face value bonds, with a coupon rate of 5% payable semi-annually.…

A: Bonds are debt instruments issued by companies. The company that issues the bond pays periodic…

Q: Home Depot has debt outstanding with a face value of $30 billion. The coupon rate on these bonds is…

A: Face value: $30 billionCoupon rate: 6.2%YTM: 7.8%Tax rate: 26%

Q: Too Young, Incorporated, has a bond outstanding with a coupon rate of 6.7 percent and semiannual…

A:

Q: Assume that Riverbed Inc. invests in a bond for $120,000. The bond was purchased at par and is…

A: The amount a bank anticipates losing while extending credit to its customers on average over a…

Q: Ford Motor Company has issued bonds with a maturity date of November 1, 2046 that have a coupon rate…

A: While determining the amount of coupon to be paid or the price of bond at the time of issue, it is…

Q: Which of the following statements is true

A: Zero coupon bond refers to a bond in which no intermediate interest is distributed in form of coupon…

Q: Curtis Corporation's non-callable bonds currently sell for $1,165. They have a 15-year maturity, an…

A: The face value of the bond is $1,000. The market value of the bond is $1,165. The maturity is 15.…

Q: Wisteria Company has some $1,000 par value bonds outstanding which pay a 14 percent annual coupon…

A: A financial instrument with a fixed cost that helps a company to raise funds for business operations…

Q: percent, paid semi-annually. What is the company's pretax cost of debt if the bonds currently sell…

A: Cost of debt is the part of debt that a company pay for the debt. It is the amount paid for the…

Q: A firm has two classes of securities: long-term bonds and common stock. The bonds have 16 years to…

A: Value of debt = d = $749 millionNumber of Stock = n = 31 millionMarket price of stock = ps = $26

Q: You are analyzing the after-tax cost of debt for a firm . You know that the firm's 12 - year…

A: Explanation:1. Understand the Given Data:• Maturity (n) = 12 years• Coupon Rate (C) = 14.50%…

Q: BP has a bond outstanding with 15 years to maturity, a $1,000 par value, a coupon rate of 6.3%, with…

A: Cost of debt refers to the interest that companies pay on their debt. Companies can finance their…

Q: Beckham Corporation has semiannual bonds outstanding with nine years to maturity that are currently…

A: A bond is a type of debt security. Borrowers, such as businesses or governments, issue bonds to…

Q: Tesla Rati's outstanding bonds have a $1,000 par value which were issued 7 years ago. At the time of…

A: Par value = $1,000Coupon rate = 5%Years to maturity = 25 yearsPrice of bonds = $900After 7…

Q: Weismann Company issued 14-year bonds a year ago at a coupon rate of 10 percent. The bonds make…

A: Solution:-Bond price means the price at which a bond should trade in the market. It is the summation…

Q: Occam Industrial Machines issued 145,000 zero coupon bonds 7 years ago. The bonds originally had 30…

A: Zero coupon bonds are usually sold at a significant discount to face value, zero coupon bonds give…

Q: A corporate bond matures in five years. This bond’s credit spread over comparable maturity Treasury…

A: The cost of debt of a firm can also be calculated by adding the risk-free rate of return and credit…

Q: If the company’s tax rate is 28%, what component cost of debt should be used in the WACC…

A: Information Provided: Years to maturity = 15 years Coupon rate = 5% semi-annually Price = $985 Par…

Q: Ashburn Corporation issued 15-year bonds two years ago at a coupon rate of 8.2 percent. The bonds…

A: YTM = 7.83%Explanation:Step 1:FV = 1,000Coupon rate = 8.20%Coupon payment=1,000×0.082/2 = 41Years to…

Q: pretax

A: In case of bond, pre tax cost of debt is equal to yield to maturity. Formula for yield to maturity…

Q: In 2016, AT&T issued 10-year bonds with a coupon that pays $93.75 annually. At the time of issue,…

A: Here, To Find: Current price of the bonds =?

Q: In December 2002, DoubleDown, Inc. issued $100 million in bonds. These bonds originally had a 20…

A: Bonds: These are the interest-paying securities issued by a corporation or the government to raise…

Q: Mary's Institute issued a 30 year, 8% semi-annual bond 3 years ago. The bond currently sells for 93%…

A: Given:30 years, 8% semi annully bond, 3 year ago.selling at 93% of face value Tax rate=35%To…

Bond Valuation

Bond valuation are the notes issued by the corporation to raise long-term funds for the business. The corporations are required to pay the interest on such liabilities at a specified rate of interest (termed as coupon rate) at specified dates which may be on semi-annual or annual basis. These interest payments may be in the form of coupons.