After Dan’s analysis for East Coast Yachts (see the Case study for Module 2), Larissa has...
After Dan’s analysis for East Coast Yachts (see the Case study for Module 2), Larissa has decided to expand the company’s operations. She has asked Dan to enlist an underwriter to help sell $50 million (total value of all bonds) in new 20-year (maturity of each bond) bonds to finance new construction. Dan has entered into discussions with Kim McKenzie, an underwriter from the firm of Crowe & Mallard, about which bond features East Coast Yachts should consider and also what coupon rate the issue will likely have. After examining all features of each type of bonds, Dan is considering to issue coupon bearing bonds or zero coupon bonds. The YTM on either bond issue will be 7.5 percent. The coupon bond would have a 7.5 percent coupon rate.
-How many of the coupon bonds must East Coast Yachts issue to raise the $50 million? How many of the zeroes must it issue?
-In 20 years, what will be the principal repayment due if East Coast Yachts issues the coupon bonds? What if it issues the zeroes?
Homework Answers
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After Dan’s analysis for East Coast Yachts (see the Case study
for Module 2), Larissa has...
5. Analysis (15 points, requirement: You should give the process.) After Dan's EFN analysis for East...
5. Analysis (15 points, requirement: You should give the process.) After Dan's EFN analysis for East Coast Yachts (see the Mini Case in Chapter 3), Larissa has decided to expand the company's operations. She has asked Dan to enlist an underwriter to help sell $50 million in new 20-year bonds to finance new construction. Dan has entered into discussions with Kim McKenzie, an underwriter from the firm of Crowe & Mallard, about which bond features East Coast Yachts should consider...
minicase- Financing the Expansion of East Coast Yachts With a Bond Issue
Larissa Warren, the owner of East Coast Yachts, the main competitor to Deck Out My Yacht, has decided to expand her operations. She asked her newly hired financial analyst, Dan Ervin, to enlist an underwriter to help sell $40 million in new 25-year bonds to finance new construction. Dan has entered into discussions with Wilson Molina, an underwriter from the firm of Molina, Molina, & Rodriguez, about which bond features East Coast Yachts should consider and also what coupon rate...
PANSION PLANS ase FINANCING EAST COAST YACHTS'S EXPANSION P WITH A BOND ISSUE er 3), Larissa...
PANSION PLANS ase FINANCING EAST COAST YACHTS'S EXPANSION P WITH A BOND ISSUE er 3), Larissa After Dan's EFN analysis for East Coast Yachts (see the Mini Case in Chapter 3). LA has decided to expand the company's operations. She has asked Dan to enlist an underw to help sell $50 million in new 20-year bonds to finance new construction. Dan has en into discussions with Kendahl Shoemaker, an underwriter from the firm of Crowe & Malla about which bond...
Case EAST COAST YACHTS GOES PUBLIC Larissa Warren and Dan Ervin have been discussing the future...
Case EAST COAST YACHTS GOES PUBLIC Larissa Warren and Dan Ervin have been discussing the future of East Coast Yachts. The company has been experiencing fast growth and the future looks like clear sailing. However, ne fast growth means that the company's growth can no longer be funded by internal sources, so Larissa and Dan have decided the time is right to take the company public. to take the company public. To this end, Whey have entered into discussions with...
Larissa has been talking with the company’s directors about the future of East Coast Yachts. To t...
Larissa has been talking with the company’s directors about the future of East Coast Yachts. To this point, the company has used outside suppliers for various key components of the company’s yachts, including engines. Larissa has decided that East Coast Yachts should consider the purchase of an engine manufacturer to allow East Coast Yachts to better integrate its supply chain and get more control over engine features. After investigating several possible companies, Larissa feels that the purchase of Ragan Engines,...
After Dan’s analysis of East Coast Yachts’ cash flow (at the end of our previous chapter),...
After Dan’s analysis of East Coast Yachts’ cash flow (at the end of our previous chapter), Larissa approached Dan about the company’s performance and future growth plans. First, Larissa wants to find out how East Coast Yachts is performing relative to its peers. Additionally, she wants to find out the future financing necessary to fund the company’s growth. In the past, East Coast Yachts experienced difficulty in financing its growth plan, in large part because of poor planning. In fact,...
Financing S&S Air's Expansion Plans with a Bond Issue Mark Sexton and Todd Story, the owners...
Financing S&S Air's Expansion Plans with a Bond Issue Mark Sexton and Todd Story, the owners of S&S Air, have decided to expand their operations. They instructed their newly hired financial analyst, Chris Guthrie, to enlist an underwriter to help sell $20 million in new 10-year bonds to finance construction. Chris has entered into discussions with Renata Harper, an underwriter from the firm of Crowe & Mallard, about which bond features S&S Air should consider and what coupon rate the...
PART III Risk A JOB AT EAST COAST YACHTS You recently graduated from college and your...
PART III Risk A JOB AT EAST COAST YACHTS You recently graduated from college and your job search led you to East Coast Yachts. Became you felt the company's business was seaworthy, you accepted a job offer. The first day on the job, while you are finishing your employment paperwork, Dan Ervin, who works in Finance stops by to inform you about the company's 401(k) plan. A 401(k) plan is a retirement plan offered by many companies. Such plans are...
5. Analysis (15 points, requirement: You should give the process.) After Dan's EFN analysis for East Coast Yachts (see the Mini Case in Chapter 3), Larissa has decided to expand the company's operations. She has asked Dan to enlist an underwriter to help sell $50 million in new 20-year bonds to finance new construction. Dan has entered into discussions with Kim McKenzie, an underwriter from the firm of Crowe & Mallard, about which bond features East Coast Yachts should consider...
PANSION PLANS ase FINANCING EAST COAST YACHTS'S EXPANSION P WITH A BOND ISSUE er 3), Larissa After Dan's EFN analysis for East Coast Yachts (see the Mini Case in Chapter 3). LA has decided to expand the company's operations. She has asked Dan to enlist an underw to help sell $50 million in new 20-year bonds to finance new construction. Dan has en into discussions with Kendahl Shoemaker, an underwriter from the firm of Crowe & Malla about which bond...
Case EAST COAST YACHTS GOES PUBLIC Larissa Warren and Dan Ervin have been discussing the future of East Coast Yachts. The company has been experiencing fast growth and the future looks like clear sailing. However, ne fast growth means that the company's growth can no longer be funded by internal sources, so Larissa and Dan have decided the time is right to take the company public. to take the company public. To this end, Whey have entered into discussions with...
PART III Risk A JOB AT EAST COAST YACHTS You recently graduated from college and your job search led you to East Coast Yachts. Became you felt the company's business was seaworthy, you accepted a job offer. The first day on the job, while you are finishing your employment paperwork, Dan Ervin, who works in Finance stops by to inform you about the company's 401(k) plan. A 401(k) plan is a retirement plan offered by many companies. Such plans are...
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