Friday
March 27, 2015

Homework Help: Finance

Posted by k on Thursday, October 20, 2011 at 8:27pm.

Rainier Bros. has 12.0% semiannual coupon bonds outstanding that mature in 10 years. Each bond is now eligible to be called at a call price of $1,060. If the bonds are called, the company must replace them with new 10-year bonds. The flotation cost of issuing new bonds is estimated to be $45 per bond. How low would the yield to maturity on the new bonds have to be in order for it to be profitable to call the bonds today, i.e., what is the nominal annual "breakeven rate"?

Answer this Question

First Name:
School Subject:
Answer:

Related Questions

Finance - Rainier Bros. has 12.0% semiannual coupon bonds outstanding that ...
Finance - Thompson Enterprises has $5,000,000 of bonds outstanding. Each bond ...
Finance - moussawi ltd's outstanding bonds have a $1000 par value, and they ...
finance - six years ago singleton company issued 20 year bonds with a 14% annual...
finance - (Bond valuation) RCA made a coupon payment yesterday on its 6.25% ...
FINANCE - Yield to call Six years ago, the Singleton Company issued 20-year ...
Finance - United Technology Corporation (UTC) has $40 million of convertible ...
Finance - CC company's bonds mature in 10 years and have a par value of $1000 ...
Finance - Company A wants to issue new 20-year bonds for needed projects. The ...
Finance - Zabberer Corporation bonds pay a coupon rate of interest of 12 percent...

Members