I have 3 questions that I need help with. I will appreciate any help I can get! I’m stuck and can’t figure these out.

1.) Night Hawk Co. issued 16-year bonds two years ago at a coupon rate of 9.5 percent. The bonds make semiannual payments.

If these bonds currently sell for 104 percent of par value, what is the YTM?

2.) Framing Hanley, LLC, has identified the following two mutually exclusive projects:

Year Cash Flow (A) Cash Flow (B)

0 −$ 53,000 −$ 53,000

1 29,000 16,700

2 23,000 20,700

3 17,500 25,000

4 12,600 25,700

______________________________________…

Requirement 1:

(a) What is the IRR for each of these projects? (Do not include the percent signs (%). Enter rounded answers as directed, but do not use the rounded numbers in intermediate calculations. Round your answers to 2 decimal places (e.g., 32.16).)

Internal rate of return

Project A %

Project B %

______________________________________…

(b) If you apply the IRR decision rule, which project should the company accept?

Project A

Requirement 2:

(a) Assume the required return is 13 percent. What is the NPV for each of these projects? (Do not include the dollar signs ($). Enter rounded answers as directed, but do not use the rounded numbers in intermediate calculations. Round your answers to 2 decimal places (e.g., 32.16).)

Net present value

Project A $ 10532.28

Project B $ 11078.44

______________________________________…

(b) Which project will you choose if you apply the NPV decision rule?

Project B

Requirement 3:

(a) Over what range of discount rates would you choose Project A? (Do not include the percent sign (%). Enter rounded answer as directed, but do not use the rounded numbers in intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).)

Project A %

(b) Over what range of discount rates would you choose Project B? (Do not include the percent sign (%). Enter rounded answer as directed, but do not use the rounded numbers in intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).)

Project B %

(c) At what discount rate would you be indifferent between these two projects? (Do not include the percent sign (%). Enter rounded answer as directed, but do not use the rounded numbers in intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).)

Discount rate %

3.) Anderson International Limited is evaluating a project in Erewhon. The project will create the following cash flows:

Year Cash Flow

0 –$588,000

1 218,000

2 161,000

3 226,000

4 205,000

______________________________________…

All cash flows will occur in Erewhon and are expressed in dollars. In an attempt to improve its economy, the Erewhonian government has declared that all cash flows created by a foreign company are “blocked” and must be reinvested with the government for one year. The reinvestment rate for these funds is 5 percent. Assume Anderson uses a 12 percent required return on this project.

Requirement 1:

What is the NPV of the project? (Do not include the dollar sign ($). Enter rounded answer as directed, but do not use the rounded numbers in intermediate calculations. Negative amount should be indicated by a minus sign. Round your answer to 2 decimal places (e.g., 32.16).)

Net present value $

Requirement 2:

What is the IRR of the project? (Do not include the percent sign (%). Enter rounded answer as directed, but do not use the rounded numbers in intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).)

Internal rate of return %

## Help With Finance Class Please!!?

March 15th, 2013 admin