Questions Uploads
Question
How many years do these bonds have left until they mature? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
Question
bond B has 20 years to maturity.
| a. | If interest rates suddenly rise by 2.4 percent, what is the percentage change in price of bond A and bond B? (Negative answers should be indicated by a minus sign. Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places. Omit the “%” sign in your response.) |
| Bond A | % |
| Bond B | % |
| b. | If interest rates suddenly fall by 2.4 percent instead, what would be the percentage change in price of bond A and bond B? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places. Omit the “%” sign in your response.) |
| Bond A | % |
| Bond B | % |
Question
Total assets were $700,000, of which $350,000 was financed by debt.
| a. | What is the firm’s sustainable growth rate? (Do not round intermediate calculations. Enter your answer as a percent rounded to 1 decimal place.) |
| Sustainable growth rate | % |
| b. | If the firm grows at its sustainable growth rate, how much debt will be issued next year? (Do not round intermediate calculations.) |
| New debt | $ |
| c. | What would be the maximum possible growth rate if the firm did not issue any debt next year? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) |
Question
is the effective annual rate on this arrangement?
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