Dakota Corporation 15-year bonds have an equilibrium rate of return of 8 percent. For all securities, the inflation risk premium is 1.75 percent and the real risk-free rate is 3.50 percent. The security’s liquidity risk premium is 0.25 percent and maturity risk premium is 0.85 percent. The security has no special covenants. Calculate the bond’s default risk premium. (Round your answer to 2 decimal places.)

Q: depreciated on a straight-line basis. The before taxes cash flows expected to be generated by the pr...

A: The process through which a company evaluates possible big projects or investments is known as capit...

Q: You sell a put option on a stock for $4 with a strike price of $30. The stock currently sells for $2...

A: Give, Premium on option $4. Strike price is $30.  

Q: 1. Which of the following is not a component used in calculating the cost of capital? A. The cost of...

A: A company uses various sources of funds to meet its capital needs.  These funds entail a certain cos...

Q: Adam deposited $1,300 at the end of every month into an RRSP for 8 years. The interest rate earned w...

A: When an investment is made, interest is earned on the deposit so made. The accumulated value of an i...

Q: How does the value of a share of stock relate to dividends ?

A: Shares of stocks are the securities issued by the companies to arrange the funds. Companies pay divi...

Q: Issue is affordable housing- 1. What is the housing issue, what is the community, and how is the is...

A: In-house finance is when a company gives its consumers a loan so they can buy its products or servic...

Q: payout is 40 percent? SECTION-D (Compulsory) (115=15) 15. A company is considering two mutually exc...

A: Before investing in new assets, profitability of the project is evaluated by using various methods l...

Q: What is the present value of your-end-of-year investment of $1000 per year, with the first cash flow...

A:

Q: Eli wants each of his children to receive $1000000as an inheritance if he dies.this is a part of? a)...

A: Estate planning is that area of planning where the assets of an individual are passed on to other pe...

Q: Andrew has been an astute investor. He has set aside ksh 10 million to be invested in USA at a rate ...

A:

Q: (Calculating capital structure weights) The common stock of Moe's Restaurant is currently selling fo...

A: The capital structure weights to be used should be based on the market value. 

Q: Lauryn’s Doll Co. had EBIT last year of $47 million, which is net of a depreciation expense of $4.7 ...

A: Given, EBIT $47 million Depreciation $4.7 million capital expenditures $7.25 million Net working cap...

Q: AnthroPort has a beta of 1.1 and its RWACC is 13.6 percent. The market risk premium is 7.2 percent a...

A: The value of the firm at year 4 is calculated with the help of WACC and growth rate

Q: A 91-day Treasury Bill with a face value of $150,000 is sold to yield 3.01 % p.a. What is the purcha...

A: A T-Bill is a money market instrument issued by the Treasury. The maturity date of such bills is les...

Q: What is its price? What would its  price be if the required yield rose to 17 percent? 20 percent?

A: Bond: It is a debt instrument issued by a company to raise capital for the purpose of expanding busi...

Q: Communications does not currently pay a dividend. You expect the company to begin paying a dividend ...

A: Price of stock can be determined from the constant growth dividend model considering the growth rate...

Q: The total tax on an income of $256,600 is:    Select one: a. $96,194 b. $113,900 c. $112,944 d. $...

A: First 50,000 will taxed at 15%, Next 25,000 will taxed at 25%, Next 25,000 will be taxed at 34% and ...

Q: Q2.4. An arithmetic cash flow gradient series equals $500 in year 1, $600 in year 2, and amounts inc...

A:

Q: You want to buy a motorcycle for $13,500 plus freight of $105 and other delivery charges of $125. Yo...

A: Cost of Motorcycle = $13,500 Freight = $105 Other delivery charges = $125 Total value of Motorcycle ...

Q: John Mayer Inc. purchases a house for $500,000. On January 1, He makes a 20 percent down-payment and...

A:

Q: In planning for your retirement, you expect to save $500 in year 1, $1500 in year 2, and amounts inc...

A: As you have asked multiple questions, we will solve the first question as per the policy presented b...

Q: We should accept a project if the Net Present Value is positive and the Internal Rate of Return is h...

A: Net present value is referred as the difference between the cash inflow's present value and also cas...

Q: hedging arrangement and how does it reduce foreign currency risk exposure

A: Foreign currency risk can be defined as the risk of change in exchange rate of a foreign currency be...

Q: retire in 27 years. When you do, you would like to have the purchasing power of $114,071 today, duri...

A: Money needed increases with the increase in inflation and savings are needed in considering the reti...

Q: For the year ending December 31, 2017, sales for Company Y were $73.91 billion. Beginning January 1,...

A: Compounding is a method of charging interest in which Interest is charged on the amount including or...

Q: Nowadays it is very important to reduce one's carbon "footprint" (how much carbon we produce in our ...

A: IRR is the rate of return at which Net present value of the Investment is zero.  If The IRR is great...

Q: How do I compute the average rate of return of the five proposals? Rounding answers to one decimal p...

A: AVERAGE RATE OF RETURN= AVERAGE ANNUAL INCOME/AMOUNT OF INVESTMENT

Q: n investing, risk and return are highly correlated. Increased potential returns on investment usuall...

A: As you have asked multiple questions, we will solve the first question as per the policy presented b...

Q: Bailey, Inc., is considering buying a new gang punch that would allow them to produce circuit boards...

A: MARR = 3.75% First Cost = 135,000 N = 15 Salvage Value = 0   Increase in annual labor costs = 4500 D...

Q: 1. A type of risk that relates to the changes in the market value of commodities that diminishes the...

A: (Note: We’ll answer the first question since the exact one wasn’t specified. Please submit a new que...

Q: 2. The average price of gasoline may reach $5.00 per gallon in some parts of the U.S. by next month....

A: The effective annual rate of interest is the rate at which the investment actually grows. It takes i...

Q: What are the difference between primary and secondary market?

A: Capital market is where most of the financial assets and securities are traded. In capital market, t...

Q: 3BB company had cash and marketable securities worth $400,134 accounts ables worth $2,490,357, inven...

A: Since you have posted a multiple question so we will be solving the first question for you only. if ...

Q: (Annuity interest rate) Your folks just called and would like some advice from you. An insurance age...

A: An annuity refers to a series of equal and regular payments or receipts at fixed intervals. The valu...

Q: 15–4. (Adjusting a firm's capital structure) Curley’s Fried Chicken Kitchen operates two southern-co...

A: We know that Debt Ratio is the ratio of Total debt to total asset. here total debt includes short te...

Q: A company hires an employee with a family of 3 for a salary of $160,000 over 3 other candidates. If ...

A: Recruiting costs are the costs that are incurred by the company in hiring and training new employees...

Q: In certain cases, experience will indicate the best time to perform certain operations to maintain e...

A: Answer -  Part 1 - Calculation of Cost per piece - ( 200 pieces)    Particular Amount Piece pro...

Q: 2. What is the present value of an annuity of P150,000 payable at the end of each 6-month period for...

A: Note: This post has multiple questions.  The first cannot be solved since the number of years/period...

Q: You have $300,000 saved for retirement. Your account earns 5% interest. How much will you be able to...

A:   As the money saved for his retirement is $300000, he wants to withdraw a certain amount each month...

Q: Legal information exposes the Entrepreneur to all rules and regulatory aspects of the business. True...

A: Legal environment is an environment which shows all the rules , laws and regulations that are to be ...

Q: 4. 1 2 3 4 6. 7 8 9. 10 EOY 20 21 22 23 25 26 27 28 29 30 CF $300 24

A: Annuity  An annuity is the series of payments which is received or paid for a certain period of time...

Q: Kuhn Co. is considering a new project that will require an initial investment of $45 million. It has...

A:

Q: 19. Convert 20% compounded semi annually to equivalent nominal rate compounded daily.

A: Note: This post has two distinct questions. The first, Q19, has been solved below.

Q: In the 2006 Stern Review, Professor Nicholas Stern used the discount rate of 1.4% (1.3% due to techn...

A: Option B : Nordhaus’s estimation of the discount rate is more correct than Stern’s. This statement i...

Q: Risk return exercise : D2L Assessment #7 DePaul, Inc. You are searching for a stock to add to your c...

A: Given: Year Starting price Ending price 1 $40 $42 2 $42 $47 3 $47 $43 4 $43 $53

Q: He or she should have geographical proximity to the major assets of the estate. He or she should not...

A: Personal representative are needed when there is no will left to settle the property and assets. Mai...

Q: Shelby purchases a retirement annuity that will pay her $3,000 at the end of every six months for th...

A: Present value of the money would be price that maximum price that can be paid for that kind of annui...

Q: 28. Annie buys a television set from a merchant who asks for P1,250 if paid at the end of 60 days. H...

A:

Q: Consider the expected return and standard deviation of the following two assets:   Asset 1:  E[r1]...

A: Here,

Q: Written solution. How much is the amount of an ordinary annuity of which yearly payment of php25,00...

A: In order to calculate ordinary annuity, firstly we have to find out the nature of payment. If the pe...