Question
1.What time value of money formulas are needed to price a $1000 bond paying 8% with a YTM of 10%, and 10 years to maturity.
1.What time value of money formulas are needed to price a $1000 bond paying 8% with a YTM of 10%, and 10 years to maturity. Just state formulas, no computations needed.
2.
Given the following information, prepare an income statement:
Selling and administrative expenses .............$ 122,000
Depreciation expense ...................................... 53,000
Sales ................................................................ 489,000
Interest Expense .............................................. 52,000
Cost of goods sold .......................................... 156,000
Taxes .............................................................. 40% tax bracket
3.B corp has earnings before taxes of $400,000 and sales of $3,000,000. If it is in the 25% tax baracket
4. Why is the cost of debt less than the cost of preferred stock if both securities are priced to yeld 10% in the market?
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