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UOPFIN 571 Week 4 Connect ProblemsNEW
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Q-1
Even though most corporatebondsin theUnited Statesmake
coupon paymentssemiannually, bondsissued elsewhereoften
haveannual coupon payments. SupposeaGerman company issues
abond with apar valueof €1,000, 20 yearsto maturity, and a
coupon rateof 7 percent paid annually.
If theyield to maturity is8.1 percent, what isthecurrent priceof
thebond? (Do not round intermediatecalculationsand round your
answer to 2 decimal places, e.g., 32.16.)
Q-1 (Set 2)
WattersUmbrellaCorp. issued 30-year bonds2 yearsago at a
coupon rateof 7.4 percent. Thebondsmakesemiannual
payments. If thesebondscurrently sell for 83 percent of par
value, what istheYTM? (Do not round intermediatecalculations
and enter your answer asapercent rounded to 2
decimal places, e.g., 32.16.)
2.Microhard hasissued abond with thefollowing
characteristics:
Par: $1,000
Timeto maturity: 15 yearsCoupon rate: 11 percent Semiannual
payments
Calculatethepriceof thisbond if theYTM is(Do not round
intermediatecalculationsand round your answersto 2 decimal
places, e.g., 32.16.):
Q-2 (Set 2)
Union Local School District hasbondsoutstanding with acoupon
rateof 3.7 percent paid semiannually and 15 yearsto maturity. The
yield to maturity on thesebondsis4.3 percent and thebondshave
apar valueof $5,000.
What isthedollar priceof thebond? (Do not round intermediate
calculationsand round your answer to 2 decimal
places, e.g., 32.16.)
Q-3 (Set 1)
Yan Yan Corp. hasa$2,000 par valuebond outstanding with a
coupon rateof 5.5 percent paid semiannually and 16 yearsto
maturity. Theyield to maturity of thebond is5.8 percent.
What isthedollar priceof thebond? (Do not round intermediate
calculationsand round your answer to 2 decimal
places, e.g., 32.16.)
Q-3 (Set 2)
A Japanesecompany hasabond outstanding that sellsfor 90
percent of its¥100,000 par value. Thebond hasacoupon rateof
5.7 percent paid annually and maturesin 19 years.
What istheyield to maturity of thisbond? (Do not round
intermediatecalculationsand enter your answer asapercent
rounded to 2 decimal places, e.g., 32.16.)
Q-3(Set3)
Even though most corporatebondsin theUnited Statesmake
coupon paymentssemiannually, bondsissued elsewhereoften have
annual coupon payments. SupposeaGerman company issuesa
bond with apar valueof ? 1000, 25 yearsto maturity, and a
coupon rateof 6.4 percent paid annually. If theyield to maturity is
7.5 percent, what isthecurrent priceof thebond?
Q-4 (Set 1)
Thenext dividend payment by ECY, Inc., will be$1.96 per share.
Thedividendsareanticipated to maintain agrowth rateof 4
percent, forever. Thestock currently sellsfor $39 per share.
What isthedividend yield? (Do not round intermediate
calculationsand enter your answer asapercent rounded to 2
decimal places, e.g., 32.16.)
Dividend yield %
What istheexpected capital gainsyield? (Do not round
intermediatecalculationsand enter your answer asapercent
rounded to 2 decimal places, e.g., 32.16.)
Capital gainsyield %
Q-4 (Set 2)
4.Schiller Corporation will pay a$3.14 per sharedividend next
year. Thecompany pledgesto increaseitsdividend by 5 percent
per year, indefinitely. If you requireareturn of 12 percent on your
investment, how much will you pay for thecompany'sstock today?
(Do not round intermediatecalculationsand round your answer to
2 decimal places, e.g.,
32.16.)
5. Siblings, Inc., is expected to maintain a constant 3.6 percent
growth ratein itsdividends, indefinitely. Thecompany hasa
dividend yield of 5.4 percent.
What istherequired return on thecompany'sstock? (Do not
round intermediatecalculationsand enter your answer asa
percent rounded to 2 decimal places, e.g., 32.16.)
Required return %
5. (Set 2) Thenext dividend payment by ECY, Inc., will be$1.60
per share. Thedividendsareanticipated to maintain agrowth rate
of 6 percent, forever. Thestock currently sellsfor $30 per
share.
What istherequired return? (Do not round intermediate
calculationsand enter your answer asapercent rounded to 2
decimal places, e.g., 32.16.)
Q-6 (Set 1)
Ayden, Inc., hasan issueof preferred stock outstanding that paysa
dividend of $6.75 every year, in perpetuity. Thisissuecurrently
sellsfor $93 per share.
What istherequired return? (Do not round intermediate
calculationsand enter your answer asapercent rounded to 2
decimal places, e.g., 32.16.)
Q-6 (Set 2)
6. TheStarr Co. just paid adividend of $1.55 per shareon its
stock. Thedividendsareexpected to grow at aconstant rateof 6
percent per year, indefinitely. Investorsrequireareturn of
14 percent on thestock.
What isthecurrent price? (Do not round intermediatecalculations
and round your answer to 2 decimal places, e.g.,
32.16.)
What will thepricebein threeyears? (Do not round intermediate
calculationsand round your answer to 2 decimal
places, e.g., 32.16.)
What will thepricebein 7 years? (Do not round intermediate
calculationsand round your answer to 2 decimal places, e.g.,
32.16.)
7. Zoom stock hasabetaof 1.46. Therisk-freerateof return is
3.07 percent and themarket rateof return is11.81 percent.
What istheamount of therisk premium on Zoom stock?
8. Therisk premium for an individual security iscomputed by:
9. Therisk-freerateof return is3.68 percent and themarket risk
premium is7.84 percent. What istheexpected rateof
return on astock with abetaof 1.32?
10. Mullineaux Corporation has a target capital structure of 70
percent common stock and 30 percent debt. Itscost of equity is
18 percent, and thecost of debt is6 percent. Therelevant tax
rateis30 percent.
What isthecompany'sWACC? (Do not round intermediate
calculationsand enter your answer asapercent rounded to 2
decimal places, e.g., 32.16.)
Question 10 Set 2
Central Systems, Inc. desiresaweighted averagecost of capital of
9 percent. Thefirm hasan after-tax cost of debt of 5 percent and a
cost of equity of 12 percent. What debt-equity ratio isneeded for
thefirm to achieveitstargeted weighted average
cost of capital?
11.Miller Manufacturing hasatarget debt-equity ratio of .55.
Itscost of equity is14 percent, and itscost of debt is9 percent. If
thetax rateis40 percent, what isthecompany'sWACC? (Do not
round intermediatecalculationsand enter your answer asapercent
rounded to 2 decimal places,
12.Filer Manufacturing has4 million sharesof common stock
outstanding. Thecurrent sharepriceis$76, and thebook valueper
shareis$5. Thecompany also hastwo bond issuesoutstanding. The
first bond issuehasafacevalue$90 million, acoupon of 5 percent,
and sellsfor 94 percent of par. Thesecond issuehasafacevalueof
$70 million, acoupon of 6 percent, and sellsfor 104 percent of par.
Thefirst issuematuresin 20 years,
thesecond in 3 years.
a. What arethecompany'scapital structureweightson abook value
basis? (Do not round intermediatecalculationsand round your
answersto 4 decimal places, e.g., 32.1616.)
b. What arethecompany'scapital structureweightson amarket
valuebasis? (Do not round intermediatecalculationsand round your
answersto 4 decimal places, e.g., 32.1616.)
c. Which aremorerelevant?
13. Titan Mining Corporation has8.9 million sharesof common
stock outstanding and 330,000 5 percent semiannual bonds
outstanding, par value$1,000 each. Thecommon stock currently
sellsfor $37 per shareand hasabetaof 1.45, and thebondshave15
yearsto maturity and sell for 118 percent of par. Themarket risk
premium is7.7 percent, T-billsareyielding 4 percent, and the
company'stax rateis40 percent.
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Uop fin-571-week-4-connect-problems-new

  • 1. UOPFIN 571 Week 4 Connect ProblemsNEW Check thisA+ tutorial guidelineat http://www.fin571assignment.com/fin-571-uop/fin-571-week- 4-connect-problems-latest For moreclassesvisit http://www.fin571assignment.com ww.fin571assignment.co Q-1 Even though most corporatebondsin theUnited Statesmake coupon paymentssemiannually, bondsissued elsewhereoften haveannual coupon payments. SupposeaGerman company issues abond with apar valueof €1,000, 20 yearsto maturity, and a coupon rateof 7 percent paid annually. If theyield to maturity is8.1 percent, what isthecurrent priceof thebond? (Do not round intermediatecalculationsand round your answer to 2 decimal places, e.g., 32.16.)
  • 2. Q-1 (Set 2) WattersUmbrellaCorp. issued 30-year bonds2 yearsago at a coupon rateof 7.4 percent. Thebondsmakesemiannual payments. If thesebondscurrently sell for 83 percent of par value, what istheYTM? (Do not round intermediatecalculations and enter your answer asapercent rounded to 2 decimal places, e.g., 32.16.) 2.Microhard hasissued abond with thefollowing characteristics: Par: $1,000 Timeto maturity: 15 yearsCoupon rate: 11 percent Semiannual payments Calculatethepriceof thisbond if theYTM is(Do not round intermediatecalculationsand round your answersto 2 decimal places, e.g., 32.16.): Q-2 (Set 2) Union Local School District hasbondsoutstanding with acoupon rateof 3.7 percent paid semiannually and 15 yearsto maturity. The yield to maturity on thesebondsis4.3 percent and thebondshave apar valueof $5,000. What isthedollar priceof thebond? (Do not round intermediate calculationsand round your answer to 2 decimal
  • 3. places, e.g., 32.16.) Q-3 (Set 1) Yan Yan Corp. hasa$2,000 par valuebond outstanding with a coupon rateof 5.5 percent paid semiannually and 16 yearsto maturity. Theyield to maturity of thebond is5.8 percent. What isthedollar priceof thebond? (Do not round intermediate calculationsand round your answer to 2 decimal places, e.g., 32.16.) Q-3 (Set 2) A Japanesecompany hasabond outstanding that sellsfor 90 percent of its¥100,000 par value. Thebond hasacoupon rateof 5.7 percent paid annually and maturesin 19 years. What istheyield to maturity of thisbond? (Do not round intermediatecalculationsand enter your answer asapercent rounded to 2 decimal places, e.g., 32.16.) Q-3(Set3) Even though most corporatebondsin theUnited Statesmake coupon paymentssemiannually, bondsissued elsewhereoften have annual coupon payments. SupposeaGerman company issuesa bond with apar valueof ? 1000, 25 yearsto maturity, and a coupon rateof 6.4 percent paid annually. If theyield to maturity is 7.5 percent, what isthecurrent priceof thebond? Q-4 (Set 1) Thenext dividend payment by ECY, Inc., will be$1.96 per share.
  • 4. Thedividendsareanticipated to maintain agrowth rateof 4 percent, forever. Thestock currently sellsfor $39 per share. What isthedividend yield? (Do not round intermediate calculationsand enter your answer asapercent rounded to 2 decimal places, e.g., 32.16.) Dividend yield % What istheexpected capital gainsyield? (Do not round intermediatecalculationsand enter your answer asapercent rounded to 2 decimal places, e.g., 32.16.) Capital gainsyield % Q-4 (Set 2) 4.Schiller Corporation will pay a$3.14 per sharedividend next year. Thecompany pledgesto increaseitsdividend by 5 percent per year, indefinitely. If you requireareturn of 12 percent on your investment, how much will you pay for thecompany'sstock today? (Do not round intermediatecalculationsand round your answer to 2 decimal places, e.g., 32.16.) 5. Siblings, Inc., is expected to maintain a constant 3.6 percent growth ratein itsdividends, indefinitely. Thecompany hasa dividend yield of 5.4 percent. What istherequired return on thecompany'sstock? (Do not round intermediatecalculationsand enter your answer asa percent rounded to 2 decimal places, e.g., 32.16.) Required return %
  • 5. 5. (Set 2) Thenext dividend payment by ECY, Inc., will be$1.60 per share. Thedividendsareanticipated to maintain agrowth rate of 6 percent, forever. Thestock currently sellsfor $30 per share. What istherequired return? (Do not round intermediate calculationsand enter your answer asapercent rounded to 2 decimal places, e.g., 32.16.) Q-6 (Set 1) Ayden, Inc., hasan issueof preferred stock outstanding that paysa dividend of $6.75 every year, in perpetuity. Thisissuecurrently sellsfor $93 per share. What istherequired return? (Do not round intermediate calculationsand enter your answer asapercent rounded to 2 decimal places, e.g., 32.16.) Q-6 (Set 2) 6. TheStarr Co. just paid adividend of $1.55 per shareon its stock. Thedividendsareexpected to grow at aconstant rateof 6 percent per year, indefinitely. Investorsrequireareturn of 14 percent on thestock. What isthecurrent price? (Do not round intermediatecalculations and round your answer to 2 decimal places, e.g., 32.16.) What will thepricebein threeyears? (Do not round intermediate calculationsand round your answer to 2 decimal places, e.g., 32.16.)
  • 6. What will thepricebein 7 years? (Do not round intermediate calculationsand round your answer to 2 decimal places, e.g., 32.16.) 7. Zoom stock hasabetaof 1.46. Therisk-freerateof return is 3.07 percent and themarket rateof return is11.81 percent. What istheamount of therisk premium on Zoom stock? 8. Therisk premium for an individual security iscomputed by: 9. Therisk-freerateof return is3.68 percent and themarket risk premium is7.84 percent. What istheexpected rateof return on astock with abetaof 1.32? 10. Mullineaux Corporation has a target capital structure of 70 percent common stock and 30 percent debt. Itscost of equity is 18 percent, and thecost of debt is6 percent. Therelevant tax rateis30 percent. What isthecompany'sWACC? (Do not round intermediate calculationsand enter your answer asapercent rounded to 2 decimal places, e.g., 32.16.) Question 10 Set 2 Central Systems, Inc. desiresaweighted averagecost of capital of 9 percent. Thefirm hasan after-tax cost of debt of 5 percent and a cost of equity of 12 percent. What debt-equity ratio isneeded for thefirm to achieveitstargeted weighted average cost of capital? 11.Miller Manufacturing hasatarget debt-equity ratio of .55.
  • 7. Itscost of equity is14 percent, and itscost of debt is9 percent. If thetax rateis40 percent, what isthecompany'sWACC? (Do not round intermediatecalculationsand enter your answer asapercent rounded to 2 decimal places, 12.Filer Manufacturing has4 million sharesof common stock outstanding. Thecurrent sharepriceis$76, and thebook valueper shareis$5. Thecompany also hastwo bond issuesoutstanding. The first bond issuehasafacevalue$90 million, acoupon of 5 percent, and sellsfor 94 percent of par. Thesecond issuehasafacevalueof $70 million, acoupon of 6 percent, and sellsfor 104 percent of par. Thefirst issuematuresin 20 years, thesecond in 3 years. a. What arethecompany'scapital structureweightson abook value basis? (Do not round intermediatecalculationsand round your answersto 4 decimal places, e.g., 32.1616.) b. What arethecompany'scapital structureweightson amarket valuebasis? (Do not round intermediatecalculationsand round your answersto 4 decimal places, e.g., 32.1616.) c. Which aremorerelevant? 13. Titan Mining Corporation has8.9 million sharesof common stock outstanding and 330,000 5 percent semiannual bonds outstanding, par value$1,000 each. Thecommon stock currently sellsfor $37 per shareand hasabetaof 1.45, and thebondshave15 yearsto maturity and sell for 118 percent of par. Themarket risk premium is7.7 percent, T-billsareyielding 4 percent, and the company'stax rateis40 percent.