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hi i am h aving the hardest time getting started on this assisgnment that is due tonight..can anyone help me I most calculate all questions
hi i am having the hardest time getting started on this assisgnment that is due tonight..can anyone help me
I most calculate all questions in excel and then explain them in word documents
Consider the following situations and answer the related questions:
- Your company has the opportunity to make an investment that promises to pay $24,000 after 6 years. If your company has a required return of 8.5% on this type of investment, what is the maximum amount that the company should pay for the investment? Explain your answer.
- In the previous scenario, assume that your company negotiated a deal where it would pay $12,000 for the investment and receive a payment of $24,000 at the end of 7 years. What is the IRR on this investment? Should the company make the investment? Explain your answer.
- Another investment opportunity available to your company involves the purchase of some common stock from Zorp Corporation. The company has asked you to evaluate the stock, which paid a dividend of $4.25 last year and is currently selling for $36 per share. If your company decides to buy the stock, the stock will be held for 5 years and then sold. The growth rate on the stock is constant at 3% per year, and your company's required return on the stock would be 11%. What is the maximum price per share that your company should pay for the stock?
- Zorp Corporation also has some bonds for sale that your company is considering. These bonds have a $1,000 par value and will mature in 16 years. The coupon rate on the bonds is 5% paid annually, and they are currently selling for $987 each. The bonds are call protected for the next 4 years, and after this period, they are callable at 105. On the basis of this information, answer the following questions:
- What is the YTM on these bonds?
- If the bonds are called immediately after the call protection period, what would be the yield to call (YTC)?
- If the bonds paid interest semiannually instead of annually, would the YTC, the YTM, or both change? Explain your answers.
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