Case summary: Larissa has chosen to increase the activities of East Coast Yachts as a result of Dan's EFN research. To finance new building, she has requested Dan to help sell
Characters in the case: Dan, Larissa, Kendahl
Adequate information: Dan is also debating whether to issue zero-coupon bonds or bonds that bear coupons. Both bond issues will have a YTM of
To determine: Would you recommend a zero-coupon issue or a regular coupon issue and would you recommend an ordinary call feature or a make-whole call feature?
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CORPORATE FINANCE--CONNECT ACCESS CARD
- Find the present value of the following ordinary annuities. (Notes: If you are using a financial calculator, you can enter the known values and then press the appropriate key to find the unknown variable. Then, without clearing the TVM register, you can "override" the variable that changes by simply entering a new value for it and then pressing the key for the unknown variable to obtain the second answer. This procedure can be used in many situations, to see how changes in input variables affect the output variable. Also, note that you can leave values in the TVM register, switch to Begin Mode, press PV, and find the PV of the annuity due.) Do not round intermediate calculations. Round your answers to the nearest cent. Now rework parts a, b, and c assuming that payments are made at the beginning of each year; that is, they are annuities due. Present value of $800 per year for 10 years at 14%: $ Present value of $400 per year for 5 years at 7%: $ Present value of $800 per year for 5…arrow_forwardwhat is the discounted payback period? note: PLEASE YOU DONT USE EXCEL!arrow_forward1. Explain the logic behind creating “spreads” with options.arrow_forward
- Use both the TVM equations and a financial calculator to find the following values. (Hint: If you are using a financial calculator, you can enter the known values and then press the appropriate key to find the unknown variable. Then, without clearing the TVM register, you can "override" the variable that changes by simply entering a new value for it and then pressing the key for the unknown variable to obtain the second answer. This procedure can be used in parts b and d, and in many other situations, to see how changes in input variables affect the output variable.) Do not round intermediate calculations. Round your answers to the nearest cent. a. An initial $500 compounded for 10 years at 3%. $ b. An initial $500 compounded for 10 years at 6%. S C. The present value of $500 due in 10 years at a 3% discount rate. S d. The present value of $500 due in 10 years at a 6% discount rate. $arrow_forwardnd the present value of the following ordinary annuities. (Notes: If you are using a financial calculator, you can enter the known values and then press the appropriate key to find the unknown variable. Then, without clearing the TVM register, you can "override" the variable that changes by simply entering a new value for it and then pressing the key for the unknown variable to obtain the second answer. This procedure can be used in many situations, to see how changes in input variables affect the output variable. Also, note that you can leave values in the TVM register, switch to Begin Mode, press PV, and find the PV of the annuity due.) Do not round intermediate calculations. Round your answers to the nearest cent. $600 per year for 10 years at 12%. $ $300 per year for 5 years at 6%. $ $600 per year for 5 years at 0%. $ Now rework parts a, b, and c assuming that payments are made at the beginning of each year; that is, they are annuities due. Present value of $600…arrow_forwardUse both the TVM equations and a financial calculator to find the following values. (Hint: If you are using a financial calculator, you can enter the known values and then press the appropriate key to find the unknown variable. Then, without clearing the TVM register, you can "override" the variable that changes by simply entering a new value for it and then pressing the key for the unknown variable to obtain the second answer. This procedure can be used in parts b and d, and in many other situations, to see how changes in input variables affect the output variable.) Do not round intermediate calculations. Round your answers to the nearest cent. An initial $400 compounded for 10 years at 5%. An initial $400 compounded for 10 years at 10%. The present value of $400 due in 10 years at a 5% discount rate. The present value of $400 due in 10 years at a 10% discount rate.arrow_forward
- Make-or-Buy Decision. Can you do A please?arrow_forwardFor the toolbar , press ALT + F10 ( PC ) or ALT + FN + F10 ( Mac What is the key difference what is the key deference between Value - at - Risk ( VaR ) and volatility ? More specifically, what is the advantage of using VaR as opposed to volatility ?arrow_forwardSell or Process Further. Can you help with A?arrow_forward
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