Question 2 Cross-Ocean Boats Ltd. is in the 30% tax bracket. It is interested in determining the minimum return that its stakeholders (investors) will accept. Since you have applied for an internship with them, they have assigned this task to you. To get started with your work, you compile some information as follows: 1. Cross-Oceans has 3000, 6% semi-annual coupon bonds outstanding. These bonds will mature in 12 years and they sell for 80% of their par value as of now. 2. The firm is also partly equity financed. It has 100,000 outstanding common shares and 19,000 shares of preferred stock. The common shares command a market price of $55 per share and the beta of Cross-Ocean stock is 1.20. Preference shares offer a 6% fixed dividend and sell for $110 per share. 3. The risk-free rate is 4% and the market risk premium is 6% Armed with this information, compute: 1. The minimum required return by Cross-Ocean's debtholders 2. The minimum required return by Cross-Ocean's common shareholders 3. The minimum required return by Cross-Ocean's preferred shareholders

Question 2 Cross-Ocean Boats Ltd. is in the 30% tax bracket. It is interested in determining the minimum return that its stakeholders (investors) will accept. Since you have applied for an internship with them, they have assigned this task to you. To get started with your work, you compile some information as follows: 1. Cross-Oceans has 3000, 6% semi-annual coupon bonds outstanding. These bonds will mature in 12 years and they sell for 80% of their par value as of now. 2. The firm is also partly equity financed. It has 100,000 outstanding common shares and 19,000 shares of preferred stock. The common shares command a market price of $55 per share and the beta of Cross-Ocean stock is 1.20. Preference shares offer a 6% fixed dividend and sell for $110 per share. 3. The risk-free rate is 4% and the market risk premium is 6% Armed with this information, compute: 1. The minimum required return by Cross-Ocean's debtholders 2. The minimum required return by Cross-Ocean's common shareholders 3. The minimum required return by Cross-Ocean's preferred shareholders

Entrepreneurial Finance

6th Edition

ISBN:9781337635653

Author:Leach

Publisher:Leach

Chapter14: Security Structures And Determining Enterprise Values

Section: Chapter Questions

Problem 10EP

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Cross-Ocean Boats Ltd. is in the 30% tax bracket. It is interested in determining the minimumreturn that its stakeholders (investors) will accept. Since you have applied for an internshipwith them, they have assigned this task to you.To get started with your work, you compile some information as follows:1. Cross-Oceans has 3000, 6% semi-annual coupon bonds outstanding. These bonds willmature in 12 years and they sell for 80% of their par value as of now.2. The firm is also partly equity financed. It has 100,000 outstanding common shares and19,000 shares of preferred stock. The common shares command a market price of $55per share and the beta of Cross-Ocean stock is 1.20. Preference shares offer a 6% fixeddividend and sell for $110 per share.3. The risk-free rate is 4% and the market risk premium is 6% Armed with this information, compute:4. The overall minimum required return for Cross-Ocean’s stakeholders. Please show full workings (without the use of microsoft excel)
Cross-Ocean Boats Ltd. is in the 30% tax bracket. It is interested in determining the minimumreturn that its stakeholders (investors) will accept. Since you have applied for an internshipwith them, they have assigned this task to you.To get started with your work, you compile some information as follows:1. Cross-Oceans has 3000, 6% semi-annual coupon bonds outstanding. These bonds willmature in 12 years and they sell for 80% of their par value as of now.2. The firm is also partly equity financed. It has 100,000 outstanding common shares and19,000 shares of preferred stock. The common shares command a market price of $55per share and the beta of Cross-Ocean stock is 1.20. Preference shares offer a 6% fixeddividend and sell for $110 per share.3. The risk-free rate is 4% and the market risk premium is 6%Armed with this information, compute:1. The minimum required return by Cross-Ocean’s debtholders 2. The minimum required return by Cross-Ocean’s common shareholders 3. The minimum required…
Cross-Ocean Boats Ltd. is in the 30% tax bracket. It is interested in determining the minimumreturn that its stakeholders (investors) will accept. Since you have applied for an internshipwith them, they have assigned this task to you. To get started with your work, you compile some information as follows: a. Cross-Oceans has 3000, 6% semi-annual coupon bonds outstanding. These bonds willmature in 12 years and they sell for 80% of their par value as of now. b. The firm is also partly equity financed. It has 100,000 outstanding common shares and19,000 shares of preferred stock. The common shares command a market price of $55per share and the beta of Cross-Ocean stock is 1.20. Preference shares offer a 6% fixeddividend and sell for $110 per share. c. The risk-free rate is 4% and the market risk premium is 6%Armed with this information, compute: 4. The overall minimum required return for Cross-Ocean’s stakeholders. N.B. Show all workings
Cross-Ocean Boats Ltd. is in the 30% tax bracket. It is interested in determining the minimum return that its stakeholders (investors) will accept. Since you have applied for an internship with them, they have assigned this task to you. To get started with your work, you compile some information as follows: a. Cross-Oceans has 3000, 6% semi-annual coupon bonds outstanding. These bonds will mature in 12 years and they sell for 80% of their par value as of now. b. The firm is also partly equity financed. It has 100,000 outstanding common shares and 19,000 shares of preferred stock. The common shares command a market price of $55 per share and the beta of Cross-Ocean stock is 1.20. Preference shares offer a 6% fixed dividend and sell for $110 per share. c. The risk-free rate is 4% and the market risk premium is 6% Compute: a.The minimum required return by Cross-Ocean’s debtholders b. The minimum required return by Cross-Ocean’s common shareholders
Cross-Ocean Boats Ltd. is in the 30% tax bracket. It is interested in determining the minimum return that its stakeholders (investors) will accept. Since you have applied for an internship with them, they have assigned this task to you. To get started with your work, you compile some information as follows: Cross-Oceans has 3000, 6% semi-annual coupon bonds outstanding. These bonds will mature in 12 years and they sell for 80% of their par value as of now.The firm is also partly equity financed. It has 100,000 outstanding common shares and19,000 shares of preferred stock. The common shares command a market price of $55 per share and the beta of Cross-Ocean stock is 1.20. Preference shares offer a 6% fixed dividend and sell for $110 per share. The risk-free rate is 4% and the market risk premium is 6% Armed with this information, compute: The minimum required return by Cross-Ocean’s debtholders The minimum required return by Cross-Ocean’s common shareholders The minimum required…
Cross-Ocean Boats Ltd. is in the 30% tax bracket. It is interested in determining the minimum return that its stakeholders (investors) will accept. Since you have applied for an internship with them, they have assigned this task to you. To get started with your work, you compile some information as follows: Cross-Oceans has 3000, 6% semi-annual coupon bonds outstanding. These bonds will mature in 12 years and they sell for 80% of their par value as of now. The firm is also partly equity financed. It has 100,000 outstanding common shares and 19,000 shares of preferred stock. The common shares command a market price of $55 per share and the beta of Cross-Ocean stock is 1.20. Preference shares offer a 6% fixed dividend and sell for $110 per share. The risk-free rate is 4% and the market risk premium is 6% Armed with this information, compute: a. The minimum required return by Cross-Ocean’s debtholders b. The minimum required return by Cross-Ocean’s common shareholders c. The…
Cross-Ocean Boats Ltd. is in the 30% tax bracket. It is interested in determining the minimum return that its stakeholders (investors) will accept. Since you have applied for an internship with them, they have assigned this task to you. To get started with your work, you compile some information as follows: Cross-Oceans has 3000, 6% semi-annual coupon bonds outstanding. These bonds will mature in 12 years and they sell for 80% of their par value as of now. The firm is also partly equity financed. It has 100,000 outstanding common shares and 19,000 shares of preferred stock. The common shares command a market price of $55 per share and the beta of Cross-Ocean stock is 1.20. Preference shares offer a 6% fixed dividend and sell for $110 per share. The risk-free rate is 4% and the market risk premium is 6%. Question 1 - What is the minimum required return by Cross-Ocean’s debtholders?Question 2 - What is the minimum required return by Cross-Ocean’s common shareholders?Question 3 - What…
Cts Ltd. is in the 30% tax bracket. It is interested in determining the minimum return that its stakeholders (investors) will accept. Since you have applied for an internship with them, they have assigned this task to you.To get started with your work, you compile some information as follows:1. Cts Ltd has 3000, 6% semi-annual coupon bonds outstanding. These bonds will mature in 12 years and they sell for 80% of their par value as of now.2. The firm is also partly equity financed. It has 100,000 outstanding common shares and 19,000 shares of preferred stock. The common shares command a market price of $55 per share and the beta of Cts Ltd stock is 1.20. Preference shares offer a 6% fixed dividend and sell for $110 per share.3. The risk-free rate is 4% and the market risk premium is 6% Compute: 1. The minimum required return by Cts Ltd's debtholders 2. The minimum required return by Cts Ltd's common shareholders3. The minimum required return by Cts Ltd's preferred shareholders4. The…
Current Attempt in Progress You know that the after-tax cost of debt capital for Oriole Company is 15.4 percent. If the firm has only one issue of five-year bonds outstanding. Assume the bonds make semiannual coupon payments and the marginal tax rate is 30 percent. Assume the par value of the bonds is $1,000. Excel Template (Note: This template includes the problem statement as it appears in your textbook. The problem assigned to you here may have different values. When using this template, copy the problem statement from this screen for easy reference to the values you've been given here, and be sure to update any values that may have been pre-entered in the template based on the textbook version of the problem.) Problem 13.15 a1-a2 (Excel Video)(a1) Calculate the pre-tax cost of debt capital. Pre-tax cost of debt capital
eston Help A firm raises capital by selling $28,000 worth of debt with flotation costs equal to 1% of its par value. If the debt matures in 15 years and has an annual coupon interest rate of 7%, what is the bond's YTM? The bond's YTM is %. (Round to two decimal places.) Тext dia Librai l Calculat r Resource Enter your answer in the answer box and then click Check Answer. ic Study Check Answer Clear All es All parts showing nunication Tools > This course (Introduction to Finance (EIN-101-D02) Distance Spring 2021) is hased on 7utter/Smart- Drincinles of Managerial Finance Rrief Re 4/1. P Type here to search insert
3. Assume you purchased a bond for $9,186. The bond pays $300 interest every six months. You sell the bond after 18 months for $10,000. Calculate the following: a. Income. b. Capital gain (or loss). c. Total return in dollars and as a percentage of the original investment. Review Only Click the icon to see the Worked Solution. a. The current income is $ (Round to the nearest dollar.) b. The capital gain (or loss) is $ (Enter a loss as a negative number and round to the nearest dollar.) c. The total return in dollars is $ (Round to the nearest dollar.) The total return as a percentage of the original investment is %. (Enter as a percentage and round to two decimal places.)
Problem 2 (What is the solution?) A company has issued 10-year bonds, with a face value of 1,000,000 Php, in 1,000 units. Interest at 16% is paid quarterly. If an investor desires to earn 20% nominal interest on 100,000 Php worth of these bonds, what would the selling price have to be? Ans should be: 82,836 Php