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A: Given data:Fixed rate = 4.3%Nominal principal amount = 10090000Current libor = 5%Year 1 Libor =…
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A: The after-tax cost of debt is computed using the below-mentioned formula:
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Q: Yosemite Corporation has an outstanding debt of $10.1 million on which it pays a 6 percent fixed…
A: The outstanding debt refers to the total amount of debt that Yosemite Corporation currently owes. In…
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Q: Answer must be correct or i will give down vote
A: Current Debt Payments:Principal: $10.05 millionFixed interest rate: 7%Annual interest payment:…
Q: Inter Tech Corporation needed financing to build a new manufacturing plant. On June 30th of this…
A: Price of bond is the present value of coupon payments plus present value of the par value of bond.
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A: Compound = Semiannually = 2Time = t = (10 - 4) * 2 = 12Coupon rate = c = 7.5 / 2 = 3.75%Quoted Price…
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Q: At the present time, Water and Power Company (WPC) has 5-year noncallable bonds with a face value of…
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A: Step 1:
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Q: Mullet Technologies is considering whether or not to refund a $75 million, 13% coupon, 30-year bond…
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A: 1. The formula sheet is: The calculation is:
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A: Information Provided: Years to maturity = 15 years Coupon rate = 5% semi-annually Price = $985 Par…
Q: The Wagner Corporation has a $21 million bond obligation outstanding, which it is considering…
A: The total outflows consist of the call premium, the underwriting cost of the new issue, and the…
Q: The Landers Corporation needs to raise $1.00 million of debt on a 25-year Issue. If It places the…
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Q: jiminy's cricket farm issued a 30-year, 7 percent semiannual bond 3 years ago. the bond currently…
A: A bond pays regular equal coupons paid over the maturity of the bond along with par value at the…
Q: ange Ltd is a AAA credit rating company and plans to raise new capital for its new project. The…
A: In this we need to find the yield on bond and cost to equity and than decide which is minimum.
Q: (Cost of debt) Temple-Midland, Inc. is issuing a $1,000 par value bond that pays 7.7 percent annual…
A: The annual coupon payment is calculated below
Q: Yosemite Corporation has an outstanding debt of $10.05 million on which it pays a 7 percent fixed…
A: In a swap, there are two counterparties, one of the counterparties pays either fix/floating rate and…
Five years ago, the State of Oklahoma issued $2,000,000 of 7% coupon, 20-year semiannual payment, tax-exempt bonds. The bonds had 5 years of call protection, but now the state can call the bonds if it chooses to do so. The call premium would be 6% of the face amount. Today 15-year, 5%, semiannual payment bonds can be sold at par, but flotation costs on this issue would be 2%. What is the
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$278,606 |
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$258,606 |
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$238,606 |
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$208,606 |
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$198,606 |
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- Yosemite Corporation has an outstanding debt of $10.03 million on which it pays a 5 percent fixed interest rate annually. Yosemite just made its annual interest payment and has three years remaining until maturity. Yosemite believes that interest rates will fall over the next three years and that floating-rate debt will allow it to reduce its overall borrowing costs. A bank offers Yosemite a three-year interest rate swap with annual payments in which Yosemite will pay LIBOR, currently at 4.2 percent, and receive a 3.7 percent fixed rate on $10.03 million notional principal. Suppose that LIBOR turns out to be 3.6 percent in one year and 3.3 percent in two years. Including Interest payments on Yosemite's outstanding debt and payments on the swap, what will be Yosemite's net interest payments for the next three years? Note: Negative values should be indicated by parentheses. Answer is complete but not entirely correct. Net Interest Payments Year 11 $ (180,540) Year 21 $ (120,360) Year 3 $…Mullet Technologies is considering whether or not to refund a $75 million, 13% coupon, 30-year bond issue that was sold 5 years ago. It is amortizing $8 million of flotation costs on the 13% bonds over the issue's 30-year life. Mullet's investment banks have indicated that the company could sell a new 25-year issue at an interest rate of 9% in today's market. Neither they nor Mullet's management anticipate that interest rates will fall below 9% any time soon, but there is a chance that rates will increase. A call premium of 11% would be required retire the old bonds, and flotation costs on the new issue would amount to $6 million. Mullet's marginal federal-plus-state tax rate is 30%. The new bonds would be issued 1 month before the old bonds are called, with the proceeds being invested in short-term government securities returning 5% annually during the interim period. The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required…The Wagner Corporation has a $29 million bond obligation outstanding, which it is considering refunding. Though the bonds were initially issued at 16 percent, the interest rates on similar issues have declined to 13.3 percent. The bonds were originally issued for 25 years and have 21 years remaining. The new issue would be for 21 years. There is a 8 percent call premium on the old issue. The underwriting cost on the new $29 million issue is $640,000, and the underwriting cost on the old issue was $490,000. The company is in a 40 percent tax bracket, and it will allow an overlap period of one month (1/12 of the year). Treasury bills currently yield 5 percent. (Do not round intermediate calculations. Enter the answers in whole dollars, not in millions. Round the final answers to nearest whole dollar.) a Calculate the present value of total outflows. Total outflows $ 3450000 b. Calculate the present value of total inflows. Total inflows $ 469800 c. Calculate the net present value. Net…
- Castle 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?Yosemite Corporation has an outstanding debt of $10.12 million on which it pays a 5 percent fixed interest rate annually. Yosemite Just made its annual interest payment and has three years remaining until maturity. Yosemite believes that interest rates will fall over the next three years and that floating-rate debt will allow it to reduce its overall borrowing costs. A bank offers Yosemite a three-year interest rate swap with annual payments in which Yosemite will pay LIBOR, currently at 5.1 percent, and receive a 4.6 percent fixed rate on $10.12 million notional principal. Suppose that LIBOR turns out to be 4.5 percent in one year and 4.2 percent in two years. Including interest payments on Yosemite's outstanding debt and payments on the swap, what will be Yosemite's net interest payments for the next three years? Note: Negative values should be indicated by parentheses. Year 11 Year 2 Year 3 Net Interest Payments 12New York Waste (NYW) is considering refunding a $50,000,000, annual payment, 10% coupon, 30-year bond issue that was issued 5 years ago. It has been amortizing $3 million of flotation costs on these bonds over their 30-year life. The company could sell a new issue of 25-year bonds at an annual interest rate of 6% in today's market. A call premium of 10% would be required to retire the old bonds, and flotation costs on the new issue would amount to $3 million. NYW's marginal tax rate is 40%. The new bonds would be issued when the old bonds are called. Should NYW proceed with the bond refunding? What is the NPV?
- Mullet Technologies is considering whether or not to refund a $75 million, 13% coupon, 30-year bond issue that was sold 5 years ago. It is amortizing $8 million of flotation costs on the 13% bonds over the issue's 30-year life. Mullet's investment banks have indicated that the company could sell a new 25-year issue at an interest rate of 9% in today's market. Neither they nor Mullet's management anticipate that interest rates will fall below 9% any time soon, but there is a chance that rates will increase. A call premium of 11% would be required to retire the old bonds, and flotation costs on the new issue would amount to $6 million. Mullet's marginal federal-plus-state tax rate is 30%. The new bonds would be issued 1 month before the old bonds are called, with the proceeds being invested in short-term government securities returning 5% annually during the interim period. The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required…(Cost of debt) Temple-Midland, Inc. is issuing a $1,000 par value bond that pays 8.2 percent annual interest and matures in 15 years. Investors are willing to pay $946 for the bond and Temple faces a tax rate of 35 percent. What is Temple's after-tax cost of debt on the bond? The after-tax cost of debt is%. (Round to two decimal places.)The Mossman Castle Hill has a $19 million bond obligation outstanding, which it is considering refunding. Though the bonds were initially issued at 10 percent, the interest rates on similar issues have declined to 8.6 percent. The bonds were originally issued for 20 years and have 10 years remaining. The new issue would be for 10 years. There is a 10 percent call premium on the old issue. The underwriting cost on the new $18,000,000 issue is $530,000, and the underwriting cost on the old issue was $380,000. The company is in a 35 percent tax bracket, and it will use an 8 percent discount rate (rounded after-tax cost of debt) to analyse the refunding decision. Should the old issue be refunded with new debt? (Follow the steps from the textbook example!) Skip Start Solving
- Supper Accountants Inc plans to sell a bond to finance its plant. The face value of the bond is $100,000 and it will be due in 5 years. The bond is offered at 6% annual interest rate, although the market rate is 7%. Supper Accountants is expected to receive $95,900 in cash when the sales is completed. How much interest expense should Supper Accountants record for the first year? 6,000 5,754 7,000 6.173Suppose your company needs to raise $36.9 million and you want to issue 24-year bonds for this purpose. Assume the required return on your bond issue will be 9.4 percent, and you’re evaluating two issue alternatives: a 9.4 percent semiannual coupon bond and a zero coupon bond. Your company’s tax rate is 35 percent. Both bonds would have a face value of $1,000. Assume that the IRS amortization rules apply for the zero coupon bonds. Calculate the firm’s aftertax cash outflows for the first year under the two different scenarios.Yosemite Corporation has an outstanding debt of $10.09 million on which it pays a 5 percent fixed interest rate annually. Yosemite just made its annual interest payment and has three years remaining until maturity. Yosemite believes that interest rates will fall over the next three years and that floating-rate debt will allow it to reduce its overall borrowing costs. A bank offers Yosemite a three-year interest rate swap with annual payments in which Yosemite will pay LIBOR, currently at 4.8 percent, and receive a 4.3 percent fixed rate on $10.09 million notional principal. Suppose that LIBOR turns out to be 4.2 percent in one year and 3.9 percent in two years. Including interest payments on Yosemite's outstanding debt and payments on the swap, what will be Yosemite's net interest payments for the next three years? Note: Negative values should be indicated by parentheses. Year 1 Year 2 Year 3. Answer is not complete. Net. Interest Payments $ (121,080)
