Homework Answers
Current yield and yield to maturity are methods of calculating the yield of bond
.A bond's current yield is an investment''s annual income,including both interest payments and dividends payment,which are divided current price of the security.
Yield to maturity is the total return anticipated on a bond if the bond is held until it matures.
Difference-The yield to maturity is the yield when bond is mature,while the current yield is the yield of a bond at the present moment.
current yield=Annual cash flow/ Market price
= 1000*9%/850
=0.1058
10.58%
Yield to maturity=
Dividend yield= Annual Dividend/share price
= 2.50/50=5%
Book value=tangible asset-liabilities/no.of outstanding share
=20000000-8000000/500000
=$24 per share
EPS=Net profit-preferred dividend/no.of common share
=2500000-240000/500000
=$4.52
PE ratio=Price per share/earning per share
= 50/4.52
=11
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די the investor select? Why? 4 11. Calculating current yield and yield to maturity. Describe and differentiate between...
a. The after-tax cost of debt using the bond's yield to maturity (YTM) is The after-tax...
a. The after-tax cost of debt using the bond's yield to
maturity (YTM) is
The after-tax cost of debt using the approximation formula
is
b. The cost of preferred stock is
c. The cost of retained earnings is
The cost of new common stock is
d. Using the cost of retained earnings, the firm's WACC
is
Using the cost of new common stock, the firm's WACC is
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You are given the following information for Golden Fleece Financial: $400,000 Long-term debt outstanding: Current yield...
You are given the following information for Golden Fleece Financial: $400,000 Long-term debt outstanding: Current yield to maturity (rdebt): Number of shares of common stock: Price per share: Book value per share: Expected rate of return on stock (requity): 15,000 $ 50.00 $ 35 15% Calculate Golden Fleece's company cost of capital. Ignore taxes. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) Cost of capital
The question is what is the current yield the Additional information is on the other photos...
The
question is what is the current yield
the
Additional information is on the other photos that were attached I
just checked and one through four are there
With the upcoming annual shareholders' meeting only a week away, the Chief Executive Officer of a business had a great deal of information to prepare. Profits for the five-year-old plastics company were at record levels and $300,000 was available for dividends to be paid. But technological advancements in the thermoforming industry were...
MULTIPLE CHOICES value of each year's coupon payiments b. The yield to maturity is a measure...
MULTIPLE CHOICES
value of each year's coupon payiments b. The yield to maturity is a measure of a bond's total return, only including the coupon income. . If you buy the bond today and hold it to maturity, your return will be yield to d. The relationship between price and yield is that the higher the price you pay for a bond, the higher the yield 1o. Which one of the following statements is correet regarding interest rates and bond...
22) The market price of a bond with 12 years until maturity and an annual coupon...
22) The market price of a bond with 12 years until maturity and an annual coupon rate of 8% increased yesterday. Which one of these may havecaused this price increase? 22) AJ The issuing firm announced that its annual earnings met investor expectations. B) The bond's rating was downgraded. C) The issuing firm announced the next interest payment. D) Market interest rates decreased. 23) Which one of the following is fixed for the life of a given bond? B) Coupon...
Excel Activity: Calculating the WACC
Here is the condensed 2021 balance sheet for Skye Computer Company (in thousands of dollars):2021Current assets$2,000Net fixed assets3,000Total assets$5,000Accounts payable and accruals$900Short-term debt100Long-term debt1,500Preferred stock (10,000 shares)200Common stock (50,000 shares)1,125Retained earnings1,175 Total common equity$2,300Total liabilities and equity$5,000Skye's earnings per share last year were $2.65. The common stock sells for $50.00, last year's dividend (D0) was $1.65, and a flotation cost of 12% would be required to sell new common stock. Security analysts are projecting that the common dividend will grow at...
QUESTION 4: A firm has a capital structure containing 40 percent debt, 10 percent preferred stock,...
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**THIS QUESTION HAS 5 PARTS TOTAL** 1. What is the yield to maturity on Ramblin Wreck,...
**THIS QUESTION HAS 5 PARTS
TOTAL**
1. What is the yield to maturity on Ramblin Wreck, Inc.
bonds?
2. What is the cost of equity?
3. What is the weight in debt for the project?
4. What is the WACC for the project?
5. What is the NPV of the project? (express in millions, so
1000000 would be 1.00)
#28 Ramblin Wreck is a firm specializing in engineering components. The firm is publicly traded and is considering the following project:...
WEIGHTED AVERAGE COST OF CAPITAL – P&G. Peñafiel and Godoy have an optimal capital structure that...
WEIGHTED AVERAGE COST OF CAPITAL – P&G. Peñafiel and Godoy have an optimal capital structure that consists of 40% debt and 60% common equity. They expect to have $30,000,000 of new retained earnings available for investment for the next year. BONDS. Their investment bankers assure them that they could issue $8,000,000 (net of flotation costs) of $1000 face value bonds carrying a 10% coupon rate, paying annual interest, having a 10-year maturity, at a price of $900. Flotation costs for...
a. The after-tax cost of debt using the bond's yield to
maturity (YTM) is
The after-tax cost of debt using the approximation formula
is
b. The cost of preferred stock is
c. The cost of retained earnings is
The cost of new common stock is
d. Using the cost of retained earnings, the firm's WACC
is
Using the cost of new common stock, the firm's WACC is
X P9-17 (similar to) Question Help Calculation of individual costs and WACC Dillon...
You are given the following information for Golden Fleece Financial: $400,000 Long-term debt outstanding: Current yield to maturity (rdebt): Number of shares of common stock: Price per share: Book value per share: Expected rate of return on stock (requity): 15,000 $ 50.00 $ 35 15% Calculate Golden Fleece's company cost of capital. Ignore taxes. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) Cost of capital
The
question is what is the current yield
the
Additional information is on the other photos that were attached I
just checked and one through four are there
With the upcoming annual shareholders' meeting only a week away, the Chief Executive Officer of a business had a great deal of information to prepare. Profits for the five-year-old plastics company were at record levels and $300,000 was available for dividends to be paid. But technological advancements in the thermoforming industry were...
MULTIPLE CHOICES
value of each year's coupon payiments b. The yield to maturity is a measure of a bond's total return, only including the coupon income. . If you buy the bond today and hold it to maturity, your return will be yield to d. The relationship between price and yield is that the higher the price you pay for a bond, the higher the yield 1o. Which one of the following statements is correet regarding interest rates and bond...
22) The market price of a bond with 12 years until maturity and an annual coupon rate of 8% increased yesterday. Which one of these may havecaused this price increase? 22) AJ The issuing firm announced that its annual earnings met investor expectations. B) The bond's rating was downgraded. C) The issuing firm announced the next interest payment. D) Market interest rates decreased. 23) Which one of the following is fixed for the life of a given bond? B) Coupon...
QUESTION 4: A firm has a capital structure containing 40 percent debt, 10 percent preferred stock, and 50 percent common stock equity. The firm's debt has a yield to maturity of 9.50 percent. Its preferred stock's annual dividend is $7.50 and the preferred stock's current market price is $50.00 per share. The firm's common stock has a beta of 0.90 and the risk-free rate and the market return are currently 4.0 percent and 13.5 percent, respectively. The firm is subject...
**THIS QUESTION HAS 5 PARTS
TOTAL**
1. What is the yield to maturity on Ramblin Wreck, Inc.
bonds?
2. What is the cost of equity?
3. What is the weight in debt for the project?
4. What is the WACC for the project?
5. What is the NPV of the project? (express in millions, so
1000000 would be 1.00)
#28 Ramblin Wreck is a firm specializing in engineering components. The firm is publicly traded and is considering the following project:...
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