Evergreen Inc. has issued a semi - annual coupon bond. The bond has a $ 1 0
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Question:
Evergreen Inc. has issued a semiannual coupon bond. The bond has a $ face value, a
coupon rate, and matures in years. The current annual yieldtomaturity for all bonds
of the company is note: this is APR
a What is the semiannual coupon amount?
b What is the price of this bond?
c What is the current yield of this bond?
Suppose Evergreen believes that its current share price is undervalued and considers
buying back shares. To do this, Evergreen decides to issue a zerocoupon bond that matures
in years and use the proceeds to buy back shares. The firm decides to buy back
shares for now. The current stock price of Evergreen is $ and assume the buyback
decision does not change the stock price. Assume the effective annual rate EAR that can
be used to discount this new zerocoupon bond is same as that of the existing bonds
d What is the total face value of the zerocoupon bond that Evergreen needs to issue?
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