1. Grand Adventure Properties offers a 8 percent coupon bond with annual payments. The yield to maturity is 6.85 percent and the maturity date is 8 years from today. What is the market price of this bond if the face value is $1,000?
3. A Japanese company has a bond outstanding that sells for 89 percent of its ¥100,000 par value. The bond has a coupon rate of 4.8 percent paid annually and matures in 19 years.
What is the yield to maturity of this bond? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
10. Central Systems, Inc. desires a weighted average cost of capital of 9 percent. The firm has an after-tax cost of debt of 6 percent and a cost of equity of 12 percent. What debt-equity ratio is needed for the firm to achieve its targeted weighted average cost of capital?
11. Miller Manufacturing has a target debt–equity ratio of .50. Its cost of equity is 15 percent, and its cost of debt is 6 percent. If the tax rate is 34 percent, what is the company’s WACC? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
12. Filer Manufacturing has 5 million shares of common stock outstanding. The current share price is $84, and the book value per share is $7. The company also has two bond issues outstanding. The first bond issue has a face value $60 million, a coupon of 7 percent, and sells for 94 percent of par. The second issue has a face value of $35 million, a coupon of 8 percent, and sells for 107 percent of par. The first issue matures in 22 years, the second in 4 years.
13. Titan Mining Corporation has 9.7 million shares of common stock outstanding and 410,000 –4 percent semiannual bonds outstanding, par value $1,000 each. The common stock currently sells for $45 per share and has a beta of 1.35, and the bonds have 10 years to maturity and sell for 116 percent of par. The market risk premium is 8.5 percent, T-bills are yielding 5 percent, and the company’s tax rate is 35 percent.
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