# Question

John Tye was hired as the new corporate finance analyst at I-Ell Enterprises and received his first assignment. John is to take the $25 million in cash received from a recent divestiture, to use part of these proceeds to retire an outstanding $10 million bond issue and to use the remainder to repurchase common stock. However, the bond issue cannot be retired for another two years. If John can place the funds necessary to retire this $10 million debt into an account earning a 6% annual return compounded monthly, how much of the $25 million remains to repurchase stock?

## Answer to relevant Questions

Find the present value of a 3-year, $20,000 ordinary annuity deposited into an account that pays 12% annual interest, compounded monthly. Solve for the present value of the annuity in the following ways: a. As three single ...You are planning to purchase a building for $40,000, and you have $10,000 to apply as a down payment. You may borrow the remainder under the following terms: a 10-year loan with semiannual repayments and a stated interest ...A firm issues a bond at par value. Shortly thereafter, interest rates fall. If you calculate the coupon rate, coupon yield, and yield to maturity for this bond after the decline in interest rates, which of the three values ...Calculate the price of a 5-year, $1,000 par value bond that makes semiannual payments, has a coupon rate of 8 %, and offers a yield to maturity of 7 %. Recalculate the price assuming a 9 % YTM. What is the general ...The rate of inflation is 5 % and the real interest rate is 3 %. What is the nominal interest rate?Post your question

0