# What is the market value of the bond and why?

Knight Transportation, Inc. issued bonds on January 1, 2000 with a face value of \$1000 per bond. They are due on January 1, 2003. The coupon rate is 6.10% and the market rate is 5.80%. What is the market value of the bond and why? Use an Excel template and copy the answer to solution window.Assume Chicago Corporation pays a \$5.00 dividend and will have a sale price of \$200 in one year. The current required rate of return is 20%. What is the current value of the share?Assume the dividend in the next period is \$10, the market rate is 12%, and the grow rate is projected at 4%. What is the current value of a share of stock?Crescent Industries management is planning on replacing some machinery in its plant. The projected cash flows are shown below. The firm uses an 18% cost of capital.Net Present Value CalculationsYear Cash Flow 0 (\$3,300,000) 1 \$875,123 2 \$966,222 3 \$1,145,000 4 \$1,250,399 5 \$1,504,455 Hathaway, Inc., a resort management company, is refurbishing one of its hotels at the cost of \$6.8 million. Management expects this will lead to additional cash inflows of \$1.8 million each year, over the next five years. Cost of capital is 12%. Calculate the IRR. Should they go ahead with this project?Spokane Foundry plans to spend \$1,000,000 on new tooling. They are projecting this investment will generate \$300,000 a year over the next five years. Depreciation is projected to be \$100,000 per year. The tax rate is 30% and they use a 20% discount rate. What is the NPV after taxes taking depreciation into consideration? Should they make the investment?

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