Homework Answers
Current yield and yield to maturity are methods of calculating the yield of bond
.A bond's current yield is an investment''s annual income,including both interest payments and dividends payment,which are divided current price of the security.
Yield to maturity is the total return anticipated on a bond if the bond is held until it matures.
Difference-The yield to maturity is the yield when bond is mature,while the current yield is the yield of a bond at the present moment.
current yield=Annual cash flow/ Market price
= 1000*9%/850
=0.1058
10.58%
Yield to maturity=
Dividend yield= Annual Dividend/share price
= 2.50/50=5%
Book value=tangible asset-liabilities/no.of outstanding share
=20000000-8000000/500000
=$24 per share
EPS=Net profit-preferred dividend/no.of common share
=2500000-240000/500000
=$4.52
PE ratio=Price per share/earning per share
= 50/4.52
=11
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a. The after-tax cost of debt using the bond's yield to
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The after-tax cost of debt using the approximation formula
is
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The
question is what is the current yield
the
Additional information is on the other photos that were attached I
just checked and one through four are there
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MULTIPLE CHOICES
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a. The after-tax cost of debt using the bond's yield to
maturity (YTM) is
The after-tax cost of debt using the approximation formula
is
b. The cost of preferred stock is
c. The cost of retained earnings is
The cost of new common stock is
d. Using the cost of retained earnings, the firm's WACC
is
Using the cost of new common stock, the firm's WACC is
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The
question is what is the current yield
the
Additional information is on the other photos that were attached I
just checked and one through four are there
With the upcoming annual shareholders' meeting only a week away, the Chief Executive Officer of a business had a great deal of information to prepare. Profits for the five-year-old plastics company were at record levels and $300,000 was available for dividends to be paid. But technological advancements in the thermoforming industry were...
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MULTIPLE CHOICES
value of each year's coupon payiments b. The yield to maturity is a measure of a bond's total return, only including the coupon income. . If you buy the bond today and hold it to maturity, your return will be yield to d. The relationship between price and yield is that the higher the price you pay for a bond, the higher the yield 1o. Which one of the following statements is correet regarding interest rates and bond...
22) The market price of a bond with 12 years until maturity and an annual coupon rate of 8% increased yesterday. Which one of these may havecaused this price increase? 22) AJ The issuing firm announced that its annual earnings met investor expectations. B) The bond's rating was downgraded. C) The issuing firm announced the next interest payment. D) Market interest rates decreased. 23) Which one of the following is fixed for the life of a given bond? B) Coupon...
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