Essay About Zero Coupon Bonds And Annual Coupon Rate

Business Finance
Business Finance IFirst exercise :New fields Tech is in need of 340.000,00 eurosthey’ll issue zero coupon bonds and coupon bonds to raise this required capital equally proportional, both bonds face value 1.000,00 euroscoupon bonds, 4 years maturity, semi annual coupon rate is 8%ZCB, 21 months maturityEstimated required rate by investors is 21% for coupon bonds and an additional 2% for zero coupon bondsBank loanPv = debt                              Fv tend to be 0Rate = expressed yearlyMaturity = periodicity  n per yearC’est la fonction PMT, en francais = how should we pay per period        Second exercise :buy a truck for our distribution companyprice is 31,000 euros  la caixa may fund this by a 14% rate loan5 years, quarterly paymentswhat if we wish “killing” this debt on year 4??Investing in bonds in a companycompany goes bankrupt, i will receive nothingcompany is making average performance, decent return, i will receive FValueinvest in company, outsanding performace, i will receive FValuerepo contract = the company issuing the shares offers to the shareholders that he can resell his shares after a certain time if he’s not satistied with them.