Welles Ltd wants to sell preference shares at $7 per share. A very similar issue of preferenceshares
Question:
The price of a new small car is $45,000. You currently have $20,000 that you can invest in a bank account paying 10% compounded semi-annually. How long will it take you to buy the car?
A sole proprietor intends to borrow $30,000 at an interest rate of 10% p.a. to purchase newequipment that will generate cash flows before tax of $7,500 per year for 5 years. Depreciation
for tax purposes is straight line to zero (i.e. 20% per year). The sole proprietor has a marginalincome tax rate of 40%. On the information available what is the best estimate of the discount
rate to be used in evaluating this capital budgeting project?
A company has issued 2 million bonds that have 3 years to maturity with the face value per bondbeing $ 100 and coupon rate of 10% p.a. paid half-yearly. If the company wants to buy back all of
its issued bonds, how much would it have to pay if the current yield required by bond investors is7% p.a.?
Financial Accounting
ISBN: 978-1118978085
IFRS 3rd edition
Authors: Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso