Pollo Inc.'s 5.34% bonds have a YTM of 8.33%. The estimated risk premium between the company's bonds and stocks is 6%. Pollo's cost of common equity, Re, is ____%. Round your final answer to 2 decimal places (example: enter 12.34 for 12.34%), but do not round any intermediate work in the process.
Q: Dakota Corporation 15-year bonds have an equilibrium rate of return of 8 percent. For all…
A: Formulas: Default risk premium= Bond required return - risk free rate - Inflation risk premium -…
Q: What is the component cost of debt for use in the WACC calculation? Do not round your intermediate…
A: Information Provided: Par value = $1000 Term = 20 years Annual coupon rate = 7% semi-annually…
Q: 23. How much is the value of Bond Marble?
A: Bond: It is a debt instrument issued by the firm for raising capital from debt investors. The…
Q: Big Canyon Enterprises has bonds on the market making annual payments, with 15 ye to maturity, a par…
A: Coupon rate is defined as the rate of the interest which paid to the bond holders through the bond…
Q: In March 2016, NuVasive, a medical device company, raised $634 million of 2.25% convertible senior…
A: Excel Spreadsheet:
Q: Aloha, Inc., has 6 percent coupon bonds on the market that have 11 years left to maturity. If the…
A: Par value (FV) = 1000 Coupon rate = 6% Annual coupon amount (C) = 1000*0.06 = 60 Years to maturity…
Q: Kenny Electric Company's noncallable bonds were issued several years ago and now have 20 years to…
A: Using excel RATE function
Q: Consider the following three bond quotes: a Treasury bond quoted at 103:17, a corporate bond quoted…
A: Bonds are usually quoted as a percentage of its par value. Thus, to find the price of the bond…
Q: On January 1, 2018, Brandon Electronics issued $85 million of 11.5% bonds, dated January 1. The…
A:
Q: Assuming the bonds will be rated AA, what will the price of the AA-rated bonds be? b. How much…
A: Face Value = $1,000 Coupon Rate = 10.2% Time Period = 5 Years AA rated yield = 9.8%
Q: On January 1, 2018, Morton Sales Co. issued zero-coupon bonds with a face value of $5.7 million for…
A: Given that: Face value of zero coupon bonds = $5.7 million Period of bonds = 6 years Issue price =…
Q: AAPL Inc. is a publicly traded company that has $120 million in bank loan on its books, with a…
A: Cost of debt: It is the interest that the company pays to its debt holders.
Q: On January 1, 2016, Brandon Electronics issued $85 million of 11.5% bonds, dated January 1. The…
A:
Q: Andrew Industries is contemplating issuing a 30-year bond with a coupon rate of 7.15% (annual coupon…
A: A bond is a debt instrument that is used by a company to raise capital. Like loans, it has to be…
Q: present value of bond?
A: Bond refers to the investment securities in which an investor lends money to the government for a…
Q: Whiston Securities recently issued convertible bonds with a $1,000 parvalue. The bonds have a…
A: Computation of bond’s conversion ratio: Answer: Bond’s conversion ratio is 50 shares
Q: In December 2010, LoloLimon issued $100 million in bonds. These bonds originally had a 25 year…
A: Cost of debt: It is the cost that a company has to bear to finance through debt. It is the interest…
Q: Currently, Warren Industries can sell 20-year, $1,000-par-value bonds paying annual interest at…
A: Issue price = $ 960 Flotation cost = $ 35 Tax rate = 22% Par value = $ 1000 Coupon rate = 14% Coupon…
Q: A bond issue whose price was $ 295,000 and whose par value is $ 300,000 was sold: Multiple Choice…
A: When the issue price of the bond is less than the par value, it is said to be issued at discount.
Q: Nichols Enterprises has an investment in 31,500 bonds of Elliott Electronics that Nichols accounts…
A: Securities-available-for-sale represents the portion of investment made by the company with the…
Q: Several years ago the Jakobe Company issued a $1,000 par value, non-callable bond that now has 20…
A: In the given question we need to compute the after-tax cost of debt for use in the WACC calculation.…
Q: Cote Import has several bond issues outstanding, each making semiannual interest payments. The bonds…
A: Using excel RATE function
Q: On January 1, 2021, Brandon Electronics issued $85 million of 11.5% bonds, dated January 1. The…
A:
Q: Ashes Divide Corporation has bonds on the market with 14.5 years to maturity, a YTM of 6.8 percent,…
A: Price= $924 YTM= 6.8% Time= 14.5 years Face value= $1000 (normally all bonds have the face value of…
Q: company has bond outstanding with a par value of 100,000. the unamortized discount on these bond is…
A: When bonds are retired then resulting gain or loss will be shown in profit or loss account
Q: Ying Import has several bond issues outstanding, each making semiannual interest payments. The bonds…
A: Calculation of After-tax Cost of Debt:The after-tax cost of debt is 4.48%.Excel Spreadsheet:
Q: Workman Software has 11 percent coupon bonds on the market with 19 years to maturity. The bonds make…
A: Coupon rate = 11% Maturity = 19 years Face Value = 1000 Bond Present value = 1000*108.3% = 1083…
Q: A company's 5-year bonds are yielding 9% per year. Treasury bonds with the same maturity are…
A: The nominal yield on a bond: The nominal yield on a bond is the quoted yield on a bond. It can be…
Q: The Wall Street Journal reports that the current rate on 8-year Treasury bonds is 5.85 percent, the…
A: Default Risk premium refers to return expected by an investor over the return offered by investments…
Q: GHI Corp., a new and relatively unknown entity, has issued 5-year bonds with an interest rate of…
A: A Junk bond is a corporate bond issued by a company without investment grade credit rating. These…
Q: Plastico, a manufacturer of consumer plastic products, is evaluating its capital structure. The…
A: Hello. Since your question has multiple sub-parts, we will solve the first three sub-parts for you.…
Q: In December 2002, DoubleDown, Inc. issued $100 million in bonds. These bonds originally had a 20…
A: Bonds: These are the interest-paying securities issued by a corporation or the government to raise…
Q: answer the questions
A: Hi there, Thanks for posting the questions. But as per our honor code, we should answer the first…
Q: ndrew Industries is contemplating issuing a 30-year bond with a coupon rate of 7.13% (annual coupon…
A: Bond valuation is an important technique of securities and investment management. it determines the…
Q: Dufner Co. issued 17-year bonds one year ago at a coupon rate of 73 percent. The bonds make…
A: We’ll answer the first question since the exact one wasn’t specified. Please submit a new question…
Q: O’Shea Inc. issued bonds at a face value of $100,000, a rate of 6%, and a 5-year term for…
A: A bond is a fixed-income instrument that represents a loan from an investor to a borrower (typically…
Q: If a company issues $15,000,00 worth of bonds with a face interest rate equal to the market interest…
A: Lets start with basic understanding. When company issue bond at a interest rate which is more than a…
Q: Michalleti Marketing Consulting Ltd issued Gh¢500million of zero-coupon bonds with ex-interest of…
A: The cost of debt is the amount of the cost which is required by the company to pay to the lenders of…
Q: Several years ago the Jakob Company sold a $1,000 par value, noncallable bond that now has 20 years…
A: After tax cost of bond = Before tax cost of bond * (1-tax rate)
Q: A convertible bond has a par value of $1,000, but its current market price is at $975. The current…
A: Bonds represent the obligation of the corporation raise by the issue of securities called debts for…
Q: Dufner Co. issued 13-year bonds one year ago at a coupon rate of 6.5 percent. The bonds make…
A: We know, price of a bond = Present value of coupon payments receivable from bond discounted at YTM +…
Q: the following table represents the yield to maturity for 12 year t bonds and corporate bonds with…
A: The answer and explanation along with reasons for incorrect options are provided below.
Q: a. What is the debt/equity ratio for this firm in book value terms? In market value terms? b. What…
A: Cost of debt (yield to maturity) refers to the total return generated by a bond until it matures.…
Q: With an assumption of annual compounding, Frey, Inc. bond is a 5.00%, 15-year bond priced to yield…
A: A financial instrument that doesn’t affect the ownership of the common shareholders or management of…
Q: Nichols Enterprises has an investment in 27,000 bonds of Elliott Electronics that Nichols accounts…
A: Investment: An investment is a financial asset that is purchased with the expectation of providing…
Q: Aloha Inc. has 6.6 percent coupon bonds on the market that have 27 years left to maturity. If the…
A: Present value refers to the current valuation for a future sum. Investors determine the present…
Pollo Inc.'s 5.34% bonds have a YTM of 8.33%. The estimated risk premium between the company's bonds and stocks is 6%. Pollo's
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
- The total book value of WTC's equity is $13 million, and book value per share is $20. The stock has a market-to-book ratio of 1.5, and the cost of equity is 9%. The firms bonds have a face value of $9 million and sell at a price of 110% of face value. The yield to maturity on the bonds is 7% andthe firm's tax rate is 21%. What is the company's WACC? (Don't round intermediate calculations, enter final answers as a percent rounded to 2 decimal places.)he total book value of WTC’s equity is $7 million, and book value per share is $14. The stock has a market-to-book ratio of 1.5, and the cost of equity is 12%. The firm’s bonds have a face value of $4 million and sell at a price of 110% of face value. The yield to maturity on the bonds is 9%, and the firm’s tax rate is 21%. What is the company’s WACC? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) WACC= ______%The total book value of WTC’s equity is $14 million, and book value per share is $28. The stock has a market-to-book ratio of 1.5, and the cost of equity is 9%. The firm’s bonds have a face value of $10 million and sell at a price of 110% of face value. The yield to maturity on the bonds is 5%, and the firm’s tax rate is 21%. What is the company’s WACC? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)
- Augustine Company's stock has 47 million shares outstanding and a current market price of $50. Its bonds have $245 million of total par value, 19 years to maturity, a coupon rate of 4%, semi-annual coupon payments, and yield-to-maturity of 5.6%. The firm has no other classes of securities. When computing the WACC, what weight should the firm assign to its cost of debt? Enter your answer as a decimal and show two decimal places.Laurel, Inc., and Hardy Corp. both have 7 percent coupon bonds outstanding, with semiannual interest payments, and both are priced at par value. The Laurel, Inc., bond has three years to maturity, whereas the Hardy Corp. bond has 16 years to maturity. If interest rates suddenly rise by 2 percent, what is the percentage change in the price of these bonds? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) If interest rates were to suddenly fall by 2 percent instead, what would the percentage change in the price of these bonds be then? (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)Rupar Financial has an investment in 33,000 bonds of Anand Company that Rupar accounts for as a security available-for-sale. Anand bonds are publicly traded, and The Wall Street Journal quotes a price for those bonds of $14 per bond, but Rupar believes the market does not appreciate the full value of the Anand bonds and that a more accurate price is $24 per bond. Rupar should carry the Anand investment on its balance sheet at: Multiple Choice $627,000, the midpoint of Nichols's range of reasonably likely valuations of Elliott. $792,000. $462,000. Either $462,000 or $792,000, as either are defensible valuations.
- On January 1, 2016, Brandon Electronics issued $85 million of 11.5% bonds, dated January 1. The market yield for bonds of maturity issued by similar firms in terms of riskiness is 12.25%. How can Brandon sell debt paying only 11.5% in a 12.25% market?Draiman Corporation has bonds on the market with 23.5 years to maturity, a YTM of 7 percent, a par value of $1,000, and a current price of $1,051. The bonds make semiannual payments. What must the coupon rate be on these bonds? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)Fama's Llamas has a WACC of 8.8 percent. The company's cost of equity is 12 percent, and its pretax cost of debt is 6.8 percent. The tax rate is 22 percent. What is the company's target debt - equity ratio? Note: Do not round intermediate calculations and round your answer to 4 decimal places, e.g .. 32.1616.
- Bello Company has a debt-equity ratio of .6. Return on assets is 7.5 percent, and total equity is $486,000. a. What is the equity multiplier? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. What is the return on equity? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) c. What is the net income? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.)On January 1, 2018, Brandon Electronics issued $85 million of 11.5% bonds, dated January 1. The market yieldfor bonds of maturity issued by similar firms in terms of riskiness is 12.25%. How can Brandon sell debt payingonly 11.5% in a 12.25% market?DMA Corporation has bonds on the market with 14.5 years to maturity, a YTM of 7.5%, and a current price of $1,061. The bonds make semiannual payments and have a par value of $1,000. What must the coupon rate be on these bonds? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)