#28 Ramblin Wreck is a firm specializing in engineering components. The firm is publicly traded and...

 

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#28 Ramblin Wreck is a firm specializing in engineering components. The firm is publicly traded and is considering the following project: The project will last 5.00 years with an annual cash flow of $40.00 million. The project will require an initial investment of $140.00 million The firm must determine the cost of capital to evaluate the project. (The project is within the firm's normal activities) Ramblin Wreck, Inc. Financial Data: STOCK DATA: Current Price Per Share # of Shares Book Value BOND DATA: $27.00 Current Price Per Bond Submit 2.00 million # of bonds $50 million Annual Coupon Rate Face Value Per Bond What is the yield to maturity on Ramblin Wreck, Inc. bonds? Maturity $931.00 20,000.00 9.00% $1,000 The risk free rate in the economy is currently 2.00 %, while investors have a market risk premium of 8.00%. Ramblin Wreck, Inc. has a beta of 1.48. The tax rate is 39.00%. 10 years Answer format: Percentage Round to: 2 decimal places (Example: 9.24%, % sign required. Will accept decimal format rounded to 4 decimal places (ex: 0.0924)) Hide Hint #28 Ramblin Wreck is a firm specializing in engineering components. The firm is publicly traded and is considering the following project: The project will last 5.00 years with an annual cash flow of $40.00 million. The project will require an initial investment of $140.00 million The firm must determine the cost of capital to evaluate the project. (The project is within the firm's normal activities) Ramblin Wreck, Inc. Financial Data: STOCK DATA: Current Price Per Share # of Shares Book Value BOND DATA: $27.00 Current Price Per Bond Submit 2.00 million # of bonds $50 million Annual Coupon Rate Face Value Per Bond What is the yield to maturity on Ramblin Wreck, Inc. bonds? Maturity $931.00 20,000.00 9.00% $1,000 The risk free rate in the economy is currently 2.00 %, while investors have a market risk premium of 8.00%. Ramblin Wreck, Inc. has a beta of 1.48. The tax rate is 39.00%. 10 years Answer format: Percentage Round to: 2 decimal places (Example: 9.24%, % sign required. Will accept decimal format rounded to 4 decimal places (ex: 0.0924)) Hide Hint

Answer rating: 100% (QA)

The total rate of return that a bondholder will receive from investing in a bond until its maturity ... View the full answer