What is the relationship between a bond's price and its yield to maturity?

What is the relationship between a bond's price and its yield to maturity?

Click here for the solution: What is the relationship between a bond's price and its yield to maturity?

On January 1 2008, Hi and Lois Company purchased 12% bonds having a maturity value of $300,000 for $322,744.44

E17-3 (Entries for Held-to-Maturity Securities) On January 1 2008, Hi and Lois Company purchased 12% bonds having a maturity value of $300,000 for $322,744.44. The bonds provide the bondholders with a 10%yield. They are dated January 1, 2008, and mature January 1, 2013, with interest receivable Dec 21 of each year. Hi and Lois Company uses effective interest method to allocate unamortized discount or premium. The bonds are classified in the held to maturity category.

Instructions
a.) Prepare the journal entry at the date of the bond purchase.
b.) Prepare a bond amortization schedule.
c.) Prepare the journal entry to record the interest received and the amortization for 2008.
d.) Prepare the journal entry to record the interest received and the amortization for 2009.

Click here for the solution: On January 1 2008, Hi and Lois Company purchased 12% bonds having a maturity value of $300,000 for $322,744.44

A company has a debt with a yield to maturity of 6.3%, a cost of equity of 14.5%, and a cost of preferred stock of 9.2%

A company has a debt with a yield to maturity of 6.3%, a cost of equity of 14.5%, and a cost of preferred stock of 9.2%. The market values of its debt, preferred stock and equity are $15.2 million, $2.9 million, and $20.6 million, respectively, and its tax rate is 35%.

What is the firm’s weighted average cost of capital (WACC)?


Click here for the solution: A company has a debt with a yield to maturity of 6.3%, a cost of equity of 14.5%, and a cost of preferred stock of 9.2%