Answered step by step
Verified Expert Solution
Question
1 Approved Answer
need answers for week 4 connect problems corporate Finance. Questions are attached 1) Yan Yan Corp. has a $5,000 par value bond outstanding with a
need answers for week 4 connect problems corporate Finance. Questions are attached
1) Yan Yan Corp. has a $5,000 par value bond outstanding with a coupon rate of 5.8 percent paid semiannually and 14 years to maturity. The yield to maturity of the bond is 6.4 percent. What is the dollar price of the bond? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) 2) Union Local School District has bonds outstanding with a coupon rate of 3.4 percent paid semiannually and 17 years to maturity. The yield to maturity on these bonds is 3.7 percent and the bonds have a par value of $5,000. What is the dollar price of the bond? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) 3) Grand Adventure Properties offers a 6 percent coupon bond with annual payments. The yield to maturity is 4.85 percent and the maturity date is 7 years from today. What is the market price of this bond if the face value is $1,000? $1,014.13 $1,066.91 $1,079.42 $621.05 $947.23 4) The next dividend payment by ECY, Inc., will be $1.84 per share. The dividends are anticipated to maintain a growth rate of 5 percent, forever. The stock currently sells for $36 per share. What is the required return? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Required return % 5) Ayden, Inc., has an issue of preferred stock outstanding that pays a dividend of $5.15 every year, in perpetuity. This issue currently sells for $92 per share. What is the required return? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Required return % 6) Siblings, Inc., is expected to maintain a constant 5.6 percent growth rate in its dividends, indefinitely. The company has a dividend yield of 7.4 percent. What is the required return on the company's stock? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) 7) Zoom stock has a beta of 1.46. The risk-free rate of return is 3.07 percent and the market rate of return is 11.81 percent. What is the amount of the risk premium on Zoom stock? 9.59% 12.76% 10.25% 8.09% 17.24% 8) The risk premium for an individual security is computed by which of the following: -dividing the market risk premium by the quantity (1 + Beta). -multiplying the security's beta by the risk-free rate of return. -multiplying the security's beta by the market risk premium. -dividing the market risk premium by the beta of the security. -adding the risk-free rate to the security's expected return. 9) The risk-free rate of return is 3.68 percent and the market risk premium is 7.84 percent. What is the expected rate of return on a stock with a beta of 1.32? 9.17% 9.24% 13.12% 14.36% 14.03% 10) Miller Manufacturing has a target debt-equity ratio of .40. Its cost of equity is 13 percent, and its cost of debt is 4 percent. If the tax rate is 38 percent, what is the company's WACC? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) 11) Mullineaux Corporation has a target capital structure of 85 percent common stock and 15 percent debt. Its cost of equity is 15 percent, and the cost of debt is 6 percent. The relevant tax rate is 30 percent. What is the company's WACC? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) 12) Filer Manufacturing has 4 million shares of common stock outstanding. The current share price is $70, and the book value per share is $5. The company also has two bond issues outstanding. The first bond issue has a face value $60 million, a coupon of 5 percent, and sells for 95 percent of par. The second issue has a face value of $40 million, a coupon of 6 percent, and sells for 104 percent of par. The first issue matures in 20 years, the second in 4 years. a. What are the company's capital structure weights on a book value basis? (Do not round intermediate calculations and round your answers to 4 decimal places, e.g., 32.1616.) Equity / Value Debt / Value b. What are the company's capital structure weights on a market value basis? (Do not round intermediate calculations and round your answers to 4 decimal places, e.g., 32.1616.) Equity / Value Debt / Value c. Which are more relevant? Market value weights Book value weights 13) Titan Mining Corporation has 8.6 million shares of common stock outstanding and 300,000 5 percent semiannual bonds outstanding, par value $1,000 each. The common stock currently sells for $34 per share and has a beta of 1.3, and the bonds have 15 years to maturity and sell for 115 percent of par. The market risk premium is 7.4 percent, T-bills are yielding 3 percent, and the company's tax rate is 40 percent. a. What is the firm's market value capital structure? (Do not round intermediate calculations and round your answers to 4 decimal places, e.g., 32.1616.) Weight Debt Equity b. If the company is evaluating a new investment project that has the same risk as the firm's typical project, what rate should the firm use to discount the project's cash flows? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Discount rate %Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started