Company A's balance sheet as of today is as follows:Long-term debt (bonds, at par)Preferred stockCommon stock ($10 par)Retained earningsTotal debt and equity$10,000,0002,000,00010,000,0004,000,000$26,000,000The bonds have a 4.0% coupon rate, payable semiannually, and a par value of $1,000. They mature exactly 10 years from today. The yield to maturity is 12%,so the bonds now sell below par. What is the current market value of the firm's debt?a. $5,412,032b. $5,479,822c. $5,751,032d. $5,549,671e. $5,249,841

Calculating the current market value of the firm's debt involves determining the present value of…

Answered: Company A's balance sheet as of today…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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CMS Corporation's balance sheet as of today is as follows: Long-term debt (bonds, at par) $10,000,000 Preferred stock 1,700,000 Common stock ($10 par) 10,000,000 Retained earnings 4,600,000 Total debt and equity $26,300,000 The bonds have a 3.8% coupon rate, payable semiannually, and a par value of $1,000. They mature exactly 10 years from today. The yield to maturity is 11.1%, so the bonds now sell below par. What is the current market value of the firm's debt? Group of answer choices $5,429,902 $5,656,148 $5,260,218 $6,165,201 $5,938,955
CMS Corporation's balance sheet as of today is as follows: Long-term debt (bonds, at par) $10,000,000 Preferred stock 2,000,000 Common stock ($10 par) 10,000,000 Retained earnings 4,000,000 Total debt and equity $26,000,000 The bonds have a 7.5% coupon rate, payable semiannually, and a par value of $1,000. They mature exactly 10 years from today. The yield to maturity is 12%, so the bonds now sell below par. What is the current market value of the firm's debt?
A company issued 7%, 20-year bonds with a face amount of $82 million. The market yield for bonds of similar risk and maturity is 8%. Interest is paid semiannually. At what price did the bonds sell? Note: Do not round intermediate calculations and round you final answer to nearest whole dollar. Use tables, Excel, or a financial calculator. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) Price of bonds ........
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You are analyzing the cost of debt for a firmYou know that the firm's 14-year maturity7.8 percent coupon bonds are selling at a price of $1,052.38The bonds pay interest semiannually. If these bonds are the only debt outstanding for the firm, answer the following questions Only typed answer
A company issued 5%, 20-year bonds with a face amount of $80 million. The market yield for bonds of similar risk and maturity is 6%. Interest is paid semiannually. At what price did the bonds sell? Note: Do not round intermediate calculations and round you final answer to nearest whole dollar. Use tables, Excel, or a financial calculator. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1)
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Your answer is partially correct. Swifty Ltd. issued a $1,184,000, 10-year bond dated January 1, 2023. The bond was sold to yield 12% effective interest. The bond paid 10% interest on January 1 and July 1 each year. The company's year-end was December 31, and Swifty followed IFRS. Using 1. factor Tables 2. a financial calculator, or 3. Excel function PV, calculate the amount received for the bond, and any discount or premium on the bond.
Assume that Western Asset Management Company LLC (WAMC) has $10,000 par value zero-coupon bonds outstanding. WAMC bonds are currently trading at $5,500 with 8 years to maturity. WAMC tax bracket is 35%. Calculate the cost of debt for WAMC (System will not accept percentage (%) sign, therefore write your answer upto four decimals).
SMN Inc.'s bonds currently sell for $1,123. They have a 11-year maturity, an annual coupon of 7.05%, and a par value of $1,000. What is their capital gains yield? -0.7499% O 0.7499% O 5.5416% O6.2778% O5.5279%
Plastico, a manufacturer of consumer plastic products, is evaluating its capitalstructure. The balance sheet of the company is as follows (in millions):Assets LiabilitiesFixed assets $4,000 Debt $2,500Current assets $1,000 Equity $2,500In addition, you are provided the following information:• The debt is in the form of long-term bonds, with a coupon rate of 10%. The bondsare currently rated AA and are selling at a yield of 12% (the market value of the bonds is80% of the face value).• The firm currently has 50 million shares outstanding, and the current market priceis $80 per share. The firm pays a dividend of $4 per share and has a price/earnings ratioof 10.• The stock currently has a beta of 1.2. The riskfree rate is 8%.• The tax rate for this firm is 40% Plastico is considering a major change in its capital structure. It has three options:• Option 1: Issue $1 billion in new stock and repurchase half of its…

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