You are analyzing a distressed bond with one year to maturity. The bond has a face value of $100 and pays a coupon rate of 5 percent per year. The bond is currently trading at $80. What is the yield to maturity on the bond? If the probability of default is 35 percent, what is the cost of debt? Assume that upon default only 50 percent of face value will be recovered and that remaining coupons will not be paid.
Answer to relevant QuestionsMarineCo manufactures, markets, and distributes recreational motor boats. Using discounted free cash flow, you value the company's operations at $2,500 million. The company has a 20 percent stake in a nonconsolidated ...You are valuing a technology company whose enterprise value is $800 million. The company has no debt, but considerable employee options (10 million in total). Based on option pricing models, you value the options at $6.67 ...Exhibit 14.12 presents market and profit data for three companies. If Company 3 has nonoperating assets valued at $50 million, what are the company's appropriate enterprise-value-to-EBITDA and enterprise-valueto EBITA ...Discuss what pattern you would expect over time for market-value-tocapital and market-value-to-earnings multiples in an industry where earnings show little long-term growth but high cyclicality. Empirical research shows that goodwill impairments have no impact on a company’s share price. But these impairments do reflect an auditor’s best estimate of the value lost in an acquisition by the company. Does the stock ...
Post your question