Rd is the required return on debt from an investors view or the cost of debt from
Question:
Rd is the required return on debt from an investor’s view or the cost of debt from the company’s view.
Rd = YTM on a company’s long term bond.
Table 1 McDonald’s Bond Data from FINRA
Using the Bond data from FINRA in Table 1 above, answer the following questions:
When answering the questions, you may make the following assumptions:
A) Assume Semi-annual compounding and coupon payments
B) Assume a face or par value equal to $1000
Refer to Table 1, what is the coupon rate on the Bond? ________
Refer to Table 1, when does the bond mature (Years) ?__________
Refer to Table 1, what is the current price of the Bond in $ units. (Remember Bond prices are reported as percentages of face value.)__________
Calculate the current yield using the information you have available and the formula that follows:
Current Yield= {Annual Coupon Payment/Current Price}*100
sub product type: corporate bond
coupon: 7.375
maturity : 07/15/2033
last sale: price :104.635 and yield :6.831
Financial Analysis with Microsoft Excel
ISBN: 978-1285432274
7th edition
Authors: Timothy R. Mayes, Todd M. Shank