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The Aleander Company plans to issue $20,000,000 o...




The Aleander Company plans to issue $20,000,000 of 20-year bonds next June. The company's current cost of debt is 10 percent. However, the firm's financial manager is concerned that interest rates will increase in coming months, and has decided to take a short position in U. S. government t-bond futures. The following settle data are available for t-bond futures. Delivery Month Settle (1) (5) Dec 102-17 Mar 101-01 June 100-12 a. Calculate the current value of the futures position. b. Calculate the implied interest rate based on the current value of the futures position c. Interest rates increase as expected, by 2 percentage points. Calculate the present value of the futures position based on the rate calculated above plus the 2 points. d. Calculate the gain or loss on the futures position. e. Calculate the present value of the corporate bonds if rates increase by 2 percentage points. f. Calculate the gain or loss on the corporate bond position. g. Calculate the overall net gain or loss.,please do assignments in excel,Pierre Imports will be liquidated. Its current balance sheet is shown below. Fixed assets are sold for $1,000,000 and current assets are sold for $600,000. All fixed assets are pledged as collateral for mortgage bonds. Subordinated debentures are subordinate only to notes payable. Trustee costs are $100,000. Before Before Default Balance Sheet Default Current Assets 1,200,000 Accounts payable 400,000 Net fixed assets 1,800,000 0 Accrued taxes 80,000 Accrued wages 60,000 Notes payable 60,000 Total current liabilities 600,000 First-mortgage bonds 900,000 Second-mortgage bonds 400,000 Debentures 500,000 Subordinated debentures 300,000 Common stock 200,000 Retained earnings 100,000 Total assets 3,000,000 - Total claims 3,000,000 a. How much will SHs receive? - b. How much will mortgage bondholders receive? - c. How much will priority creditors receive?


Paper#10130 | Written in 18-Jul-2015

Price : $25