EXAM3 EXTRA CREDIT
1.
Ultimate Butter Popcorn issues 6%, 6-year bonds with a face amount of $47,000. The market interest rate for bonds of similar risk and maturity is 6%. Interest is paid semiannually.
At what price will the bonds issue? (Do not round PV factors. Round your answer to the nearest dollar amount. Omit the "$" sign in your response.) Issue price
$ 47,000
2.
Ultimate Butter Popcorn issues 7%, 6-year bonds with a face amount of $49,000. The market interest rate for bonds of similar risk and maturity is 8%. Interest is paid semiannually.
At what price will the bonds issue? (Do not round PV factors. Round your answer to the nearest dollar amount. Omit the "$" sign in your
…show more content…
Equinox Outdoor Wear issues 1,700 shares of its $.03 par value preferred stock for cash at $29 per share.
Record the issuance of the preferred shares. (Omit the "$" sign in your response.) General Journal
Debit
Credit Cash
49,300
Preferred stock
Additional paid-in capital
11.
California Surf Clothing Company issues 1,300 shares of $7 par value common stock at $22 per share. Later in the year, the company decides to repurchase 130 shares at a cost of $35 per share. Record the purchase of treasury stock. (Omit the "$" sign in your response.)
General Journal Debit Credit Treasury stock
4,550
Cash 4,550
12.
Divine Apparel has 3,100 shares of common stock outstanding. On October 1, the company declares a $4.10 per share dividend to stockholders of record on October 15. The dividend is paid on October 31. Record all transactions on the appropriate dates for cash dividends. (If no entry is required, select "No journal entry required" in the account field and enter zero (0) in the amount field. Leave no cells blank - be certain to enter "0" wherever required. Omit the "$" sign in your response.) Date
General Journal
Debit
Credit October 1 Dividends
12,710
Dividends payable
12,710
October 15 No journal entry required
GE has a face value of $98.40 and the coupon is 0.042%, which is equivalent to $0.00042, which is no money, rounded to the nearest hundredths. The maturity of the bond is 5 years (5/17/2021), so Billy would get $500.00 back from the GE bond issuers. Billy would make a dividend of $8 by buying the bond at a lower price than the returned money. PEP has a face value of $99.60 and the coupon percentage is 0.467%, which is 0.00467 and 0.01 rounded to the nearest hundredths. The maturity is 2 years (04/30/2018), so Billy would get $200.02 back and make a dividend of
A company's board of directors votes to declare a cash dividend of $1.10 per share. The company has 22,000 shares authorized, 17,000 issued, and 16,500 shares outstanding. The total amount of the cash dividend is:
For investors who own the 8.25 May ’00-’05 bond, the current bid price for 8.25 May ‘00-’05 bond is 101.25. To compute the theoretical price we have to use bid prices: (129.71875*0.6875) + (29.90625*0.3125) = $98.5273438. This shows that 8.25 May 00-05 bond is overpriced. The profit earned is 101.123-98.5273 = $2.5977. The investors should sell this bond and replace it with any of the undervalued synthetic bonds preferably the first synthetic bond
The type of preferred stock that may be exchanged at the stockholder's option for common stock is:
Off course, if we think about only these numbers it seemed that TKC is receiving more than it pays but this not exactly true since TKC paid for the bonds more than it is going to get after the 38 years (premium bond = coupon>YTM plus TKC’ initial investment of $21 million.
Sheen’s idea (finance with bond) is to issue $125M bond with an annual interest rate of 6.5% and mature in 15 years. Annual principal repayment is $6.25M and leave $37.5M outstanding at maturity. The cash outlay is $6.25M every year besides the interest. See graph below.
7. Cost of compact discs (CDs) for newly recorded releases of Rush, Billy Joel, and Bryan Adams
50% Preferred stock (5%, $50 par), 50% Common stock – This option provided for zero interest payment on bonds. The company will be able to keep all earnings before interest in taxes because interest on bonds will be paid. The company will have the most net-income out of all structures which resulted to $.203 for years 9-13 of earnings per common share. It is the recommended option to consider.
Assuming that all the bonds make only annual payments, what spot rates are imbedded in these prices?
A young firm NCI Corporation builds wind power driven energy systems. It is considering raising $400 million in debt capital for an expansion project and can issue bank debt at 16% or junk bonds at a yield of 14%.
Wilson Wonders’s bonds have 12 years remaining to maturity. Interest is paid annually, the bonds have a $1,000 par value, and the coupon interest rate is 10%. The bonds sell at a price of
Will the bonds get an investment grade rating? How can they improve the probability of getting an investment grade?
Considering the following bond: Coupon Rate - 4% 5 year maturity Priced to yield -5% The value of the bond is as follows:
Five years ago, Laissez-Faire Recliners issued $10,000,000 of corporate bonds with a 30-year maturity. The bonds have a coupon rate of 10.125%, pay interest semiannually, and have a par value of $1,000 per bond. The bonds are currently trading at a price of $879.625 per bond. A 25-year Treasury bond with a 6.825% coupon rate (paid semi-annual) and $1,000 par is currently selling for $975.42.
a) Suppose an investor has access to two bonds, one with a duration of 1.8 and the other