Finance Answers

Buttercup Inc. just issued RM1,000 par 30-year bonds. Each bond was sold for
RM1,107.20 and pay interest semiannually. Investors require a rate of 7.75% on the
bonds. What is the bonds' coupon rate?

You have been accepted to study international economics at the International
Banking College (IBC) in Kuala Lumpur. You will need RM10,500 every 6 months
(beginning today) for the next three years to cover tuition and living expenses. Mom
and Dad have agreed to pay for your education, and want to make one deposit today
in a bank account earning 6% interest, compounded semiannually. How much must
they deposit now so that you can withdraw RM10,500 at the beginning of each
semester over the next 3 years?

If you put RM200 in a savings account at the beginning of each year for 10 years and
then allow the account to compound for an additional 10 years, how much will be in
the account at the end of the 20th year? Assume that the account earns 10% and
round to the nearest RM100.

A deferred annuity will pay you RM500 at the end of each year for 10 years,
however the first payment will not be made until three years from today (payments
will be made at the end of years 3 through 12). What amount will you have to deposit
today to fund this deferred annuity? Use an 8% discount rate and round your answer
to the nearest RM100.

Your daughter is born today and you want her to be a millionaire by the time she is
35 years old. You open an investment account that promises to pay 12% per year.
How much money must you deposit each year, starting on her 1st birthday and
ending on her 35th birthday, so your daughter will have RM1,000,000 by her 35th
birthday?

A couple borrows $10,000 to buy a car. The loan Agreement specifies that monthly payments are to be made for four years. The annual interest rate is 12 percent. Determine the monthly payment.

The Smith Construction Company borrows the entire cost of a new dump truck. The loan has an annual interest rate of 12 percent and calls for monthly payments of $ 1,000 over a five year period. What is the cost of truck.

A corporate bond specifies that interest of $400 is to be paid every six months for 20 years, and then the $1,000 principal or face value of the bond also will be paid. The market interest rate for bonds of this quality is 10 percent per year. What is the market value of this bond?

A loan Agreement specifies that a payment of $133.33 are to be made each month for five years. the annual interest rate specified is 6 percent. What is the amount of loan?

Micro Spin offs Inc, issued 20-year debt a year ago at par value with a coupon rate of 9%, paid annually. Today, the debt is selling at $1050. If the firm's tax bracket is 35%, what is its after tax cost of debt?

1. Micro spinoffs also has preferred stock outstanding. The stock pays a dividend of $4 per share, and the stock sells for $40. What is the cost of preferred stock?

2. Suppose Micro Smirnoff's cost of equity is 12.5%. What is the WACC if equity is 50%, preferred stock is 20% and debt is 30% of total capital.