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1) Firm's bonds have maturity of 14 years with a= $1,000 face value, have 8% semi-annual coupon, are callable in 7 years at $1,078, and presently sell at a price of $1,144.50.

a) Determine their nominal yield to maturity?

b) What is their nominal yield to call?

2) Hybrid hydro plants Inc which has the marginal tax rate equal to 34%, has favoured stock which pays a constant dividend equal to= $15 per share. Stock presently sells for =$125. If company incurs 3% flotation cost each time it issues favoured stock, determine the cost of issuing favoured stock?

Basic Finance, Finance

  • Category:- Basic Finance
  • Reference No.:- M914998

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