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- Bramble Corporation, having recently issued a $20,094,900, 15-year bond issue, is committed to make annual sinking fund deposits of $617,600. The deposits are made on the last day of each year and yield a return of 10%.Click here to view factor tablesDetermine the amount of deficiency. (Round factor values to 5 decimal places, e.g. 1.25124 and final answer to 0 decimal places, e.g. 458,581.) Deficiency $Wildhorse Corporation, having recently issued a $ 20,110,400, 15-year bond issue, is committed to make annual sinking fund deposits of $ 612,200. The deposits are made on the last day of each year and yield a return of 10%.Click here to view factor tablesDetermine the amount of deficiency. (Round factor values to 5 decimal places, e.g. 1.25124 and final answer to 0 decimal places, e.g. 458,581.) Deficiency $ enter a dollar amount rounded to 0 decimal placesBonita Corporation, having recently issued a $20,062,200, 15-year bond issue, is committed to make annual sinking fund deposits of $620,000. The deposits are made on the last day of each year and yield a return of 10%. Will the fund at the end of 15 years be sufficient to retire the bonds? If not, what will the deficiency be?
- Ayayai Corporation wants to withdraw $125,900 (including principal) from an investment fund at the end of each year for 9 years. What should be the required initial investment at the beginning of the first year if the fund earns 11%? (Round factor values to 5 decimal places, e.g. 1.25124 and final answer to 0 decimal places, e.g. 458,581.) Required initial investment %24Ace Co. has issued $10,000,000, 20-year bonds and plans to make annual sinking fund deposits of $240,000 at the end of each year in order to repay the bonds at maturity. a. Assuming the sinking fund yields a return of 7%, should the fund balance be sufficient to repay the bonds in 20 years? b. Compute the required annual sinking fund deposits needed to accumulate the $10,000,000 repayment.Kingbird Corporation wants to withdraw $126,920 (including principal) from an investment fund at the end of each year for 9 years. What should be the required initial investment at the beginning of the first year if the fund earns 11%? Especially confused about what including principal means for the problem.
- Cargojet Corp. is preparing for the replacement of one of its jets in three years by making payments to a sinking fund at the beginning of every six months for the next three years. The fund earns 6% compounded semiannually, and the capital required in three years is $750,000. What is the size of the semiannual payment made to the sinking fund? __________ How much of the maturity value of the fund will be interest? __________ Construct a partial sinking fund schedule showing details of the first two and the last two payments and totals. Round the sinking fund payments, interest payments and increases in the fund to the nearest dollar.Manatee Corporation wants to withdraw $500,000 (including principal) from an investment fund at the end of each year for 12 years. What should be the required initial investment at the beginning of the first year if the fund earns 9%?The cash flow plan associated with a debt financing transaction allowed a company to receive $2,800,000 now in lieu of future interest payments of $196,000 per year for 10 years plus a lump sum of $2,800,000 in year 10. If the company’s effective tax rate is 33%, determine its cost of debt capital (a) before taxes, and (b) after taxes.
- PQR Corporation is considering the following alternative plans of financing for raising$4,000,000: The following additional information is available for PQR Corporation: Earnings before bond interest and income taxes (EBIT) are $9,000,000. The tax rate is 35%. All bonds or stocks are issued at their par values. Interest is payable at the end of each year. Required: Which plan should company choose & why (i.e. Explain the rationale behind selecting the plan)? Provide all the detailed calculations.The Vancouver Development Company (VDC) is planning to sell a$100 million, 10-year, 12%, semiannual payment bond issue. Provisions for a sinking fundto retire the issue over its life will be included in the indenture. Sinking fund payments willbe made at the end of each year, and each payment must be sufficient to retire 10% of theoriginal amount of the issue. The last sinking fund payment will retire the last of the bonds.The bonds to be retired each period can be purchased on the open market or obtained bycalling up to 5% of the original issue at par, at VDC’s option.a. How large must each sinking fund payment be if the company (1) uses the option tocall bonds at par or (2) decides to buy bonds on the open market? For part (2), you canonly answer in words.b. What will happen to debt service requirements per year associated with this issue overits 10-year life?c. Now consider an alternative plan where VDC sets up its sinking fund so that equal annualamounts are paid into a sinking…Purple Cloud Inc. has $500,000 to invest. The company is trying to decide between two alternative uses of the funds.One alternative provides $65,000 at the end of each year for 10 years, and the other is to receive a single lump-sumpayment of $900,000 at the end of the 10 years. Which alternative should Purple Cloud select? Assume the interestrate is constant over the entire investment