Question: PART 2: CALCULATION QUESTIONS (30marks) Direction: Answer the following question by using the required proforma and formulas. 1. Dan Ervin was recently hired by East

PART 2: CALCULATION QUESTIONS (30marks) Direction: Answer the following question by using the required proforma and formulas. 1. Dan Ervin was recently hired by East Coast Yachts to assist the company with its short term financial planning and to evaluate the companys performance. Dan graduated from college five years ago with a finance degree, and he has been employed in the treasury department of Fortune company since then. The company structured as an LLC. The company has manufactured custom mid size, high performance yachts for clients over this period, and its products have high reviews for safety and reliability. After the financial planning conducted by Dan Ervin, company have decided to expand the companys operations so in the process of funding accumulation a 5 year bond is been issued with 10 % coupon rate and BD 4000 face value with annual coupon payment and has yield to maturity of 8 %. Required:

a. Calculate the price of the bond(7 marks)

b. Draw a time line for coupon payment (3 marks)

c. East Coast Yatch company is a kind of Risk Averse in nature do you think bond issue is the best choice for the company explain by its advantages and disadvantages in detail (5 marks)

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock blur-text-image

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related General Management Questions!

Please write the selecting tools and approaches (according to the subject R esearch Method ) for this topic SECOND LANGUAGE ACQUISITION: LEVEL OF INTEREST IN LEARNING MANDARIN CHINESE LANGUAGE AS A...

How would you calculate these questions? can you do a step by step to find the answer. Really struggling. I've also attached chapter 10 mini case study as well. idk if it helps or they are connected...

Read the following information East Coast Yachts was founded 10 years ago by Larissa Warren. The companys operations are located near Hilton Head Island, South Carolina. The company has manufactured...

4/ As a practical matter, East Coast Yachts is unlikely to be willing to raise external equity capital, in part because the owners dont want to dilute their existing ownership and control positions....

CASH FLOWS AT EAST COAST YACHTS Because of the dramatic growth at East Coast Yachts, Larissa decided that the company should be reorganized as a corporation (see our Chapter 1 Closing Case for more...

2. Dan has examined the companys financial statements, as well as examining those of its competitors. Although Ragan currently has a technological advantage, Dans research indicates that Ragans...

from the mcgraw hill 12th edition Corporate finance book I need help on all the questions. we were not given instruction on how to do any of it. Any help would be appreciated! Even if its just the...

MINI CASE: Hello, Can someone answer this question by 10am please I need this answered today for homework that is due today at 11:30am. Thank you Financial Planning and External Financing Needed (40...

In 1969, Tom Warren founded East Coast Yachts. The company has manufactured custom mid-size, high-performance yachts for clients and its products have received high reviews for safety and...

pls answer all the 5 questions in below Ratios and Financial Planning at East Coast Yachts Dan Ervin was recently hired by East Coast Yachts to assist the company with its short-term financial...

During August, Radio Companys purchases of direct materials totaled $139,000; direct labor for the month was 3,400 hours at $8.75 per hour. Radio also incurred the following overhead costs:...

During the week, the Heese Restaurant Groups French fry manufacturing facility purchased 10,000 pounds of potatoes at a price of $ 1.14 per pound. The standard price per pound is $ 1.02. During the...

Which of the following forms does a C corporation file? A ) Form 1 1 2 0 B ) Form 1 1 2 0 - C C ) Form 1 1 2 0 - S D ) Form 1 0 6 5

The table below gives the number of hours spent unsupervised each day as well as the overall grade averages for seven randomly selected middle school students. Using this data, consider the equation...