The number of coupon bonds to be issued and number of zero coupon bonds to be issued. Bond: Bond is a secured liability of a company. It is a long term liability. Bond carries flat rate of interest on its value.

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Answer 1

Question

Chapter 8, Problem 28QP

a.

Summary Introduction

To calculate: The number of coupon bonds to be issued and number of zero coupon bonds to be issued.

Bond:

Bond is a secured liability of a company. It is a long term liability. Bond carries flat rate of interest on its value.

b.

Summary Introduction

To calculate: The amount of repayment if company issued coupon bonds and to calculate the amount of repayment if company issued Zero coupon bonds.

c.

Summary Introduction

To calculate: The firm’s after tax cash outflows for the first year under the two different scenarios.

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Suppose your company needs to raise $35.8 million and you want to issue 23- year bonds for this purpose. Assume the required return on your bond issue will be 8.3 percent, and you?re evaluating two issue alternatives: a 8.3 percent semiannual coupon bond and a zero coupon bond. Your company's tax rate is 35 percent. Requirement 1: (a) How many of the coupon bonds would you need to issue to raise the $35.8 million? (b) How many of the zeroes would you need to issue? Requirement 2: (a) In 23 years, what will your company's repayment be if you issue the coupon bonds? (b) What if you issue the zeroes? Requirement 3: 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.

Answer 2

Question

Chapter 8, Problem 28QP

a.

Summary Introduction

To calculate: The number of coupon bonds to be issued and number of zero coupon bonds to be issued.

Bond:

Bond is a secured liability of a company. It is a long term liability. Bond carries flat rate of interest on its value.

b.

Summary Introduction

To calculate: The amount of repayment if company issued coupon bonds and to calculate the amount of repayment if company issued Zero coupon bonds.

c.

Summary Introduction

To calculate: The firm’s after tax cash outflows for the first year under the two different scenarios.

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Answer 3

Question

Chapter 8, Problem 28QP

a.

Summary Introduction

To calculate: The number of coupon bonds to be issued and number of zero coupon bonds to be issued.

Bond:

Bond is a secured liability of a company. It is a long term liability. Bond carries flat rate of interest on its value.

b.

Summary Introduction

To calculate: The amount of repayment if company issued coupon bonds and to calculate the amount of repayment if company issued Zero coupon bonds.

c.

Summary Introduction

To calculate: The firm’s after tax cash outflows for the first year under the two different scenarios.

Expert Solution & Answer

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Answer 4

Question

Chapter 8, Problem 28QP

a.

Summary Introduction

To calculate: The number of coupon bonds to be issued and number of zero coupon bonds to be issued.

Bond:

Bond is a secured liability of a company. It is a long term liability. Bond carries flat rate of interest on its value.

b.

Summary Introduction

To calculate: The amount of repayment if company issued coupon bonds and to calculate the amount of repayment if company issued Zero coupon bonds.

c.

Summary Introduction

To calculate: The firm’s after tax cash outflows for the first year under the two different scenarios.

Expert Solution & Answer

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Answer 5

Chapter 8, Problem 28QP

a.

Summary Introduction

To calculate: The number of coupon bonds to be issued and number of zero coupon bonds to be issued.

Bond:

Bond is a secured liability of a company. It is a long term liability. Bond carries flat rate of interest on its value.

b.

Summary Introduction

To calculate: The amount of repayment if company issued coupon bonds and to calculate the amount of repayment if company issued Zero coupon bonds.

c.

Summary Introduction

To calculate: The firm’s after tax cash outflows for the first year under the two different scenarios.

Answer 6

Chapter 8, Problem 28QP

a.

Summary Introduction

To calculate: The number of coupon bonds to be issued and number of zero coupon bonds to be issued.

Bond:

Bond is a secured liability of a company. It is a long term liability. Bond carries flat rate of interest on its value.

Answer 7

Chapter 8, Problem 28QP

a.

Summary Introduction

To calculate: The number of coupon bonds to be issued and number of zero coupon bonds to be issued.

Bond:

Bond is a secured liability of a company. It is a long term liability. Bond carries flat rate of interest on its value.

Answer 8

b.

Summary Introduction

To calculate: The amount of repayment if company issued coupon bonds and to calculate the amount of repayment if company issued Zero coupon bonds.

Answer 9

b.

Summary Introduction

To calculate: The amount of repayment if company issued coupon bonds and to calculate the amount of repayment if company issued Zero coupon bonds.

Answer 10

c.

Summary Introduction

To calculate: The firm’s after tax cash outflows for the first year under the two different scenarios.

Answer 11

c.

Summary Introduction

To calculate: The firm’s after tax cash outflows for the first year under the two different scenarios.

Answer 12

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Answer 13

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Answer 14

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Answer 15

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The number of coupon bonds to be issued and number of zero coupon bonds to be issued. Bond: Bond is a secured liability of a company. It is a long term liability. Bond carries flat rate of interest on its value.

Solution Summary: The author explains how to calculate the number of coupon bonds to be issued, and the par value of the zero coupon bond.

To calculate: The number of coupon bonds to be issued and number of zero coupon bonds to be issued.

Bond:

Bond is a secured liability of a company. It is a long term liability. Bond carries flat rate of interest on its value.

To calculate: The amount of repayment if company issued coupon bonds and to calculate the amount of repayment if company issued Zero coupon bonds.

To calculate: The firm’s after tax cash outflows for the first year under the two different scenarios.

Want to see the full answer?

Chapter 8 Solutions

The number of coupon bonds to be issued and number of zero coupon bonds to be issued. Bond: Bond is a secured liability of a company. It is a long term liability. Bond carries flat rate of interest on its value.

Solution Summary: The author explains how to calculate the number of coupon bonds to be issued, and the par value of the zero coupon bond.

To calculate: The number of coupon bonds to be issued and number of zero coupon bonds to be issued. Bond: Bond is a secured liability of a company. It is a long term liability. Bond carries flat rate of interest on its value.

To calculate: The amount of repayment if company issued coupon bonds and to calculate the amount of repayment if company issued Zero coupon bonds.

To calculate: The firm’s after tax cash outflows for the first year under the two different scenarios.

Want to see the full answer?

Chapter 8 Solutions

To calculate: The number of coupon bonds to be issued and number of zero coupon bonds to be issued.

Bond:

Bond is a secured liability of a company. It is a long term liability. Bond carries flat rate of interest on its value.