:
I need help with these questions please
25. Bond valuation. A taxexempt bond was recently issued at an annual 12 percent coupon rate and matures 20 years from today. The par value of the bond is $1,000.
a.If a required market rates are 12 percent, what is the market price of the bond?
b.If required market rates fall to 6 percent, what is the market price of the bond?
c.If required market rates rise to 18 percent, what is the market price of the bond?
d.At what required market rate (6 percent, 12 percent or percent) does the above bond sell at a discount? At a premium?
26. Bond valuation. Assuming that bond in problem 25 matures in ten years, what be the market prices under the various required market interest rate changes?
27. Bond valuation. Charles City Hospital plans on issuing a taxexempt bond at the bond at an annual coupon rate of 8 percent with a maturity of thirty years. The par value of the bond is $1,000.
a.If required market rates are 8 percent, what is the value of the bond?
b.If required market rates fall to 4 percent what is the value of the bond?
c.If required market rates fall to 12 percent, what is the value of the bond?
d.At what required market rate (4 percent, 8 percent, or 12 percent) does the above bond sell at a discount? At a premium?
28. Bond valuation. A $1,000 par value bond with an annual 6 percent coupon rate with mature in twelve year. Coupon payments are made semiannually. What is its market price if the required market rate is 4 percent?
29. Bond valuation. Currently, Boston Common Community Hospitalâ€™s taxexempt bond is selling for $626.53 per bond and has a remaining maturity of twenty years. If the par value is $1,000 and the coupon rate is 7 percent, what is the yield to maturity?
30. Loan amortization. Land Hope Hospital needs to borrow $1,000,000 to purchase an MRI. The interest rate for the loan is 8 percent. Principal and interest payments are equal debt service payments, made on an annual basis. The length of the loan is five years. The CEO of Land Hope wants to develop a loan amortization schedule for this debt borrowing for tomorrow morningâ€™s meeting. Prepare such a schedule.
31. Purchase versus lease. Mercy Medical Mega Center, a taxpaying entity, has made the decision to purchase a new laser surgical device. The device costs $500,000 and will be depreciated on straightline basis over five years to a zero salvage value. Mercy Medical could borrow the full amount at a 12 percent rate for five years. The aftertax cost of debt equals 8 percent. Alternatively, it could lease the device for five years. The beforetax lease payments per year would be $90,000. The tax rate for this Mega Center is 40 percent. From a financial perspective, should Mercy lease the surgical device or borrow the money to purchase it?
32. Debt capacity. Exton Hospital is considering a new replacement hospital and plans to issue longterm bonds to finance the project. Before it meets with its investment bankers, the hospital wants to estimate how much additional debt it can take on. Currently, the hospital has annual debt service payments of $2 million, and its cash flow available to meet debt service payment is 10 million per year. For its new debt issuance, the hospital plan to issue fixedrate debt for thirty years. It also assumes that Fitch Rating Agency will assign it a BBB rating. Fitchâ€™s median debt service coverage ratio for BBB bonds is 3.0X. The expected fixed interest rate for a thirtyyear BBB rate taxexempt bond is 5 percent. Using Fitchâ€™s median debt service coverage ratio for a BBBrated bond along with the prior information, how much additional debt could Exton Hospital take on?
