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Application: ToCallorNotToCall Decisionsinvolvingcapitalexpendituresoftenrequiremanagerstoweighthecostsandbenefitsofdifferentoptionsrelatedtothefinancingofaproject.Forinstance,decidingwhentocallabondbeforematurityduetochanginginterestratescanlowertheoverallcostofaprojectsignificantlythroughrefinancing.So,itisimportanttobeabletounderstandtherealinterestratebeingpaidouttoyourbondholders(yield)atanygiventime.ForthisAssignment,reviewtheinformationpresentedinProblem7-18onpage255ofyourcoursetext.Youwillutilizetheinformationinthisweek'sreadingsandmediatomakearecommendationwithregardtowhentocallabond. PrepareaspreadsheetusingExcelorasimilarprograminwhichyoucomputetheitemslistedinpartsa,b,andd.BesuretocomputetheYield-to-Maturity(YTM)andYield-to-Call(YTC)foreachofyears5,6,7,8,and9. UtilizingWord,prepareawrittenreporttoyourfinancedirector: Includeadetailedexplanationoftheconclusionyoureachedconcerningwhetherornottocallthebondbeforematurity. Ifyourrecommendationistocallthebondearly,explainwhentocallthebondandyourrationale. Discusstheadvantagesanddisadvantagesofusingalong-termloaninsteadofabond. Submit yourAssignment(bothyourExcelandWordfiles)by Day7 . GeneralGuidanceonApplicationLength: YourAssignment,duebyDay7,willtypicallybe23pagesinlengthasageneralexpectation/estimateforeachbulletpoint.RefertotherubricfortheWeek3Assignmentforgradingelementsandcriteria.YourInstructorwillusetherubrictoassessyourwork.TosubmityourAssignment,clickon Assignments onthecoursenavigationmenu.Locatethe AssignmentTurnitinWeek3 link,thenclickonthe View/Complete link,andfollowtheon-screeninstructionsforsubmittingyourAssignment. YIELD TO MATURITY AND YIELD
Application:ToCallorNotToCallDecisionsinvolvingcapitalexpendituresoftenrequiremanagerstoweighthecostsandbenefitsofdifferentoptionsrelatedtothefinancingofaproject.Forinstance,decidingwhentocallabondbeforematurityduetochanginginterestratescanlowertheoverallcostofaprojectsignificantlythroughrefinancing.So,itisimportanttobeabletounderstandtherealinterestratebeingpaidouttoyourbondholders(yield)atanygiventime.ForthisAssignment,reviewtheinformationpresentedinProblem7-18onpage255ofyourcoursetext.Youwillutilizetheinformationinthisweek'sreadingsandmediatomakearecommendationwithregardtowhentocallabond.
- PrepareaspreadsheetusingExcelorasimilarprograminwhichyoucomputetheitemslistedinpartsa,b,andd.BesuretocomputetheYield-to-Maturity(YTM)andYield-to-Call(YTC)foreachofyears5,6,7,8,and9.
- UtilizingWord,prepareawrittenreporttoyourfinancedirector:
- Includeadetailedexplanationoftheconclusionyoureachedconcerningwhetherornottocallthebondbeforematurity.
- Ifyourrecommendationistocallthebondearly,explainwhentocallthebondandyourrationale.
- Discusstheadvantagesanddisadvantagesofusingalong-termloaninsteadofabond.
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