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Reika [66]
3 years ago
14

The Sisyphean Company has a bond outstanding with a face value of $ 5 comma 000 $5,000 that reaches maturity in 5 5 years. The b

ond certificate indicates that the stated coupon rate for this bond is 9.1 9.1​% and that the coupon payments are to be made semiannually. Assuming the appropriate YTM on the Sisyphean bond is 8 8​%, then the price that this bond trades for will be closest​ to:
Business
1 answer:
lilavasa [31]3 years ago
8 0

Answer: $5,219.59905

the price that the bond traded for would be closest to

$5,220 (rounded to whole number)

Explanation:

Using the price of bond formula below:

Price = C × 1 - [(1+r)^-n] /r + F/ (1+r)^n

C = coupon rate = 9.1% of face values ($5,000)

F= Face value(par value) = $5,000

n = number of years to maturity; 5

r = YTM (yield to maturity) = 8% = 0.08

Price = 455 × 1 - [(1+0.08)^-5]/0.08 + 5,000/(1+0.08)^5

Price = 455 × 1 - [(1.08)^-5]/0.08 + 5,000/(1.08)^5

Price= 455 × ( 1 - 0.680583197)/0.08 + 5,000 / 1.46932808

Price= 455 × (0.319416803)/0.08 + 3,402.91598

Price = 1,816.68307 + 3,402.91598

Price= $5,219.59905

≈$5,220 to the nearest whole number.

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American​ Exploration, Inc., a natural gas​ producer, is trying to decide whether to revise its target capital structure. Curren
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Answer:

a) 9.00 %

b) 7.80 %

c) yes the weight of the debt increases here is more risk in the investment as the debt payment are mandatory and failing to do so result in bankruptcy while the stock can wait to receive dividends if the income statement are good enough

d) 9.00  %

e) The increase in debt may lñead to an increase in return of the stockholders if they consider the stock riskier than before and will raise their return until the WACC equalize at the initial point beforethe trade-off occurs

Explanation:

a)

WACC = K_e(\frac{E}{E+D}) + K_d(1-t)(\frac{D}{E+D})

Ke 0.12

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Debt Weight = 0.5

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WACC 9.00000%

c)

WACC = K_e(\frac{E}{E+D}) + K_d(1-t)(\frac{D}{E+D})

Ke 0.12

Equity weight 0.3

Kd(1-t) = after tax cost of debt = 0.06

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WACC 7.80000%

d)

WACC = K_e(\frac{E}{E+D}) + K_d(1-t)(\frac{D}{E+D})

<em>Ke 0.16</em>

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WACC = 0.16(0.3) + 0.06(0.7)

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3 0
3 years ago
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Answer:

60,000,000

Explanation:

Dye trucking raised $85 million to buy stock

After the recap Dye's stock price is $8.50

Dye share had 70 million share before the recap

Therefore the number of shares present after the recap can be calculated as follows

= 70,000,000-(85,000,000/8.50)

= 70,000,000-10,000,000

= 60,000,000

Hence the number of shares after the recap is 60,000,000

8 0
3 years ago
Importance of the study of organisational buyer behaviour to the personal selling function​
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Answer:

The answer is below

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It gives the seller the proper ideas on the type of products preferred by organization buyers such that they can quickly make them available.

It also ensures the seller understands how the organization buyer operates in terms of payments, quality, quantity, and the purpose in which they are buying.

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The International Union of Service Employees estimates that franchisees pay an average of 10.7% of revenue in rental costs.

The startup costs for McDonald's franchisee are like those of KFC, Wendy and Taco Bell.

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