Suppose your company has a building worth $165 million. Because it is located in a high-risk...
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Suppose your company has a building worth $165 million. Because it is located in a high-risk area for natural disasters, the probability of a total loss in any particular year is 1.15 percent. |
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What is your company’s expected loss per year on this building? (Enter your answer in dollars, not millions of dollars, i.e. 1,234,567. Input the amount as positive value.) |
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Suppose your company has a building worth $165 million. Because
it is located in a high-risk...
Suppose your company has a building worth $420 million. Because it is located in a high-risk...
Suppose your company has a building worth $420 million. Because it is located in a high-risk area for natural disasters, the probability of a total loss in any particular year is 1.0 percent. What is your company's expected loss per year on this building? (Enter your answer in dollars, not millions of dollars, e.g., 1,234,567. Enter your answer as a positive value.) Expected loss
Suppose your company needs to raise $35.5 million and you want to issue 20-year bonds for...
Suppose your company needs to raise $35.5 million and you want to issue 20-year bonds for this purpose. Assume the required return on your bond issue will be 8 percent, and you’re evaluating two issue alternatives: a 8.0 percent semiannual coupon bond and a zero coupon bond. Your company’s tax rate is 35 percent. Requirement 1: (a) How many of the coupon bonds would you need to issue to raise the $35.5 million? (Do not round intermediate calculations. Enter the...
Suppose your company needs to raise $52 million and you want to issue 30-year bonds for...
Suppose your company needs to raise $52 million and you want to issue 30-year bonds for this purpose. Assume the required return on your bond issue will be 4.4 percent, and you’re evaluating two issue alternatives: A semiannual coupon bond with a coupon rate of 4.4 percent and a zero coupon bond. Your company’s tax rate is 23 percent. Both bonds will have a par value of $1,000. a-1. How many of the coupon bonds would you need to issue...
Suppose your company needs to raise $67 million and you want to issue 25-year bonds for...
Suppose your company needs to raise $67 million and you want to issue 25-year bonds for this purpose. Assume the required return on your bond issue will be 4.6 percent, and you’re evaluating two issue alternatives: A semiannual coupon bond with a coupon rate of 4.6 percent and a zero coupon bond. Your company’s tax rate is 23 percent. Both bonds will have a par value of $2,000. a-1. How many of the coupon bonds would you need to issue...
In calculating insurance premiums, the actuarially fair insurance premium is the premium that results in a...
In calculating insurance premiums, the actuarially fair insurance premium is the premium that results in a zero NPV for both the insured and the insurer. As such, the present value of the expected loss is the actuarially fair insurance premium. Suppose your company wants to insure a building worth $390 million. The probability of loss is 1.29 percent in one year, and the relevant discount rate is 3.1 percent. a. What is the actuarially fair insurance premium? (Do not round...
Suppose your company needs to raise $30 million and you want to issue 20-year bonds for...
Suppose your company needs to raise $30 million and you want to issue 20-year bonds for this purpose. Assume the required return on your bond issue will be 7.5 percent, and you're evaluating two issue alternatives: a 7.5 percent semiannual coupon bond and a zero coupon bond. Your company's tax rate is 35 percent Requirement 1: (a) How many of the coupon bonds would you need to issue to raise the $30 million? (Do not round intermediate calculations. Enter the...
Suppose your company needs to raise $36.2 million and you want to issue 22-year bonds for...
Suppose your company needs to raise $36.2 million and you want to issue 22-year bonds for this purpose. Assume the required return on your bond issue will be 8.7 percent, and you’re evaluating two issue alternatives: an 8.7 percent semiannual coupon bond and a zero coupon bond. Your company’s tax rate is 35 percent. Both bonds would have a face value of $1,000. a. How many of the coupon bonds would you need to issue to raise the $36.2 million?...
In calculating insurance premiums, the actuarially fair insurance premium is the premium that results in a...
In calculating insurance premiums, the actuarially fair insurance premium is the premium that results in a zero NPV for both the insured and the insurer. As such, the present value of the expected loss is the actuarially fair insurance premium. Suppose your company wants to insure a building worth $630 million. The probability of loss is 1.43 percent in one year, and the relevant discount rate is 4.6 percent. a. What is the actuarially fair insurance premium? (Enter your...
Suppose your company needs $14 million to build a new assembly line. Your target debt-equity ratio...
Suppose your company needs $14 million to build a new assembly line. Your target debt-equity ratio is .5. The flotation cost for new equity is 10 percent and the flotation cost for debt is 7 percent. Your boss has decided to fund the project by borrowing money because the flotation costs are lower and the needed funds are relatively small. a. What is your company’s weighted average flotation cost, assuming all equity is raised externally? (Do not round intermediate calculations...
In calculating insurance premiums, the actuarially fair insurance premium is the premium that results in a...
In calculating insurance premiums, the actuarially fair insurance premium is the premium that results in a zero NPV for both the insured and the insurer. As such, the present value of the expected loss is the actuarially fair insurance premium. Suppose your company wants to insure a building worth $250 million. The probability of loss is 1.32 percent in one year, and the relevant discount rate is 3.2 percent. a. What is the actuarially fair insurance premium? (Do not round...
Suppose your company has a building worth $420 million. Because it is located in a high-risk area for natural disasters, the probability of a total loss in any particular year is 1.0 percent. What is your company's expected loss per year on this building? (Enter your answer in dollars, not millions of dollars, e.g., 1,234,567. Enter your answer as a positive value.) Expected loss
In calculating insurance premiums, the actuarially fair insurance premium is the premium that results in a zero NPV for both the insured and the insurer. As such, the present value of the expected loss is the actuarially fair insurance premium. Suppose your company wants to insure a building worth $390 million. The probability of loss is 1.29 percent in one year, and the relevant discount rate is 3.1 percent. a. What is the actuarially fair insurance premium? (Do not round...
Suppose your company needs to raise $30 million and you want to issue 20-year bonds for this purpose. Assume the required return on your bond issue will be 7.5 percent, and you're evaluating two issue alternatives: a 7.5 percent semiannual coupon bond and a zero coupon bond. Your company's tax rate is 35 percent Requirement 1: (a) How many of the coupon bonds would you need to issue to raise the $30 million? (Do not round intermediate calculations. Enter the...
In calculating insurance premiums, the actuarially fair insurance premium is the premium that results in a zero NPV for both the insured and the insurer. As such, the present value of the expected loss is the actuarially fair insurance premium. Suppose your company wants to insure a building worth $250 million. The probability of loss is 1.32 percent in one year, and the relevant discount rate is 3.2 percent. a. What is the actuarially fair insurance premium? (Do not round...
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