1249 Words5 Pages

FIN 571 Week 4 Connect Problems – Assignment

1. Microhard has issued a bond with the following characteristics:

Par: $1,000

Time to maturity: 11 years

Coupon rate: 9 percent

Semiannual payments

Calculate the price of this bond if the YTM is (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.):

Price of the Bond

a. 9 percent $ _____

b. 11 percent $ _____

c. 7 percent $ _____

2. Watters Umbrella Corp. issued 20-year bonds 2 years ago at a coupon rate of 8.4 percent. The bonds make semiannual payments. If these bonds currently sell for 90 percent of par value, what is the YTM? (Do not round intermediate calculations and enter your answer as a percent rounded to 2*…show more content…*

Miller Manufacturing has a target debt–equity ratio of .65. Its cost of equity is 13 percent, and its cost of debt is 9 percent. If the tax rate is 40 percent, what is the company’s WACC? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

WACC _____ %

12. Filer Manufacturing has 7 million shares of common stock outstanding. The current share price is $79, and the book value per share is $6. The company also has two bond issues outstanding. The first bond issue has a face value $70 million, a coupon of 8 percent, and sells for 94 percent of par. The second issue has a face value of $40 million, a coupon of 9 percent, and sells for 107 percent of par. The first issue matures in 23 years, the second in 6 years.

a. What are the company's capital structure weights on a book value basis? (Do not round intermediate calculations and round your answers to 4 decimal places, e.g., 32.1616.)

Equity / Value _____

Debt / Value _____

b. What are the company's capital structure weights on a market value basis? (Do not round intermediate calculations and round your answers to 4 decimal places, e.g., 32.1616.)

Equity / Value _____

Debt / Value _____

c. Which are more relevant?

13. Titan Mining Corporation has 8.8 million shares of common stock outstanding and 320,000 4 percent semiannual bonds outstanding, par value $1,000 each. The common stock currently sells for $36

1. Microhard has issued a bond with the following characteristics:

Par: $1,000

Time to maturity: 11 years

Coupon rate: 9 percent

Semiannual payments

Calculate the price of this bond if the YTM is (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.):

Price of the Bond

a. 9 percent $ _____

b. 11 percent $ _____

c. 7 percent $ _____

2. Watters Umbrella Corp. issued 20-year bonds 2 years ago at a coupon rate of 8.4 percent. The bonds make semiannual payments. If these bonds currently sell for 90 percent of par value, what is the YTM? (Do not round intermediate calculations and enter your answer as a percent rounded to 2

Miller Manufacturing has a target debt–equity ratio of .65. Its cost of equity is 13 percent, and its cost of debt is 9 percent. If the tax rate is 40 percent, what is the company’s WACC? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

WACC _____ %

12. Filer Manufacturing has 7 million shares of common stock outstanding. The current share price is $79, and the book value per share is $6. The company also has two bond issues outstanding. The first bond issue has a face value $70 million, a coupon of 8 percent, and sells for 94 percent of par. The second issue has a face value of $40 million, a coupon of 9 percent, and sells for 107 percent of par. The first issue matures in 23 years, the second in 6 years.

a. What are the company's capital structure weights on a book value basis? (Do not round intermediate calculations and round your answers to 4 decimal places, e.g., 32.1616.)

Equity / Value _____

Debt / Value _____

b. What are the company's capital structure weights on a market value basis? (Do not round intermediate calculations and round your answers to 4 decimal places, e.g., 32.1616.)

Equity / Value _____

Debt / Value _____

c. Which are more relevant?

13. Titan Mining Corporation has 8.8 million shares of common stock outstanding and 320,000 4 percent semiannual bonds outstanding, par value $1,000 each. The common stock currently sells for $36

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