Answer:
indenture
Explanation:
a bond indenture is a legal document which summarizes the rights and privileges of bondholders as well as the obligations and commitments of the issuing company
a bond indenture would contain the following :
- The purpose why the bond was issued
- The stated interest rate of the bond
- The dates when interests would be paid to bondholders
- A list of covenants the issuer is subjected to in the period the bond is outstanding
- Actions that would be taken in event of non payment of interest and or principal
Answer:
11.33%
Explanation:
The dividend valuation model will be used here to calculate the cost of equity raised which can be calculated using the following formula:
r = D1 / (Po - F) + g
Here D1, Po, F and g are given in the question so by putting the values in the equation, we have
r = $1.75 / ($42.5 - 5% of Po) + 7%
r = 11.33%
Answer:
Cost of capital = 12.40%
Explanation:
given data
cost of equity = 15.4 percent
pretax cost of debt = 8.9 percent
debt-equity ratio = 0.46
tax rate = 34 percent
to find out
What is the cost of capital for this project
solution
first we get Equity multiplier that is express as
Equity multiplier = 1 + debt-equity ratio ..................1
put here value
Equity multiplier = 1 + 0.46
Equity multiplier = 1.46
and
Weight of equity will be
Weight of equity = ....................2
put here value
Weight of equity =
Weight of equity = 0.6849
and
Weight of Debt will be here
Weight of Debt = 1 - weight of equity ...........................3
put here value
Weight of Debt = 1 - 0.6849
Weight of Debt = 0.3151
so
Cost of capital will be here as
Cost of capital = Weight of Debt × pretax cost of debt × (1- tax rate ) + cost of equity × Weight of equity .....................4
put here value we get
Cost of capital = 0.3151 × 8.9% × (1 - 0.34) + 15.4% × 0.6849
Cost of capital = 12.40%
Answer:
In order to maintain the desired cash balance, the company will need to:
The company needs to take a loan of $58,000, because the cash balance is -$8,000, and the company wants to keep a ending cash balance of $50,000
Explanation:
$10,000 Beginning Cash Balance
$542,000 Cash Receipts
-$560,000 Cash Payments
-$8,000 Cash Balance
$58,000
Loan to keep the desired ending balance.
The Outstanding loan balance is not considered because it reflects the total Present Value of remaining loan installments.