Issuing Debt And Bond Valuation
Submit written responses to these questions with citations and references in APA 6th edition format!
- What avenues are available for for-profit and not-for-profit health care providers to increase their equity position?
- What are the advantages and disadvantages to a taxpaying entity in issuing debt as opposed to equity?
- Explain the difference between subordinate debentures and debentures.
- Why would an investment banker syndicate a bond issue with other investment bankers?
- If a $1,000 zero coupon bond with a 20-year maturity has a market price of $311.80, what is its rate of return?
- A tax-exempt bond was recently issued at an annual 8 percent coupon rate and matures 20 years from today. The par value of the bond is $1,000.
- If a required market rates are 8 percent, what is the market price of the bond?
- If required market rates fall to 5 percent, what is the market price of the bond?
- Charles City Hospital plans on issuing a tax-exempt bond at the bond is $1,000.
- If required market rates are 6 percent, what is the value of the bond?
- If required market rates fall to 12 percent what is the value of the bond?
- At what required market rate (3,6, or 12 percent) does the above bond sell at a discount? At a premium?
- Mercy Medical Mega Center , a taxpaying entity, has made the decision to purchase a new laser surgical device. The device costs $400,000 and will be depreciated on straight-line basis over five years to a zero salvage value. Mercy Medical could borrow the full amount at a 15 percent rate for five years. The after-tax cost of debt equals 9 percent. Alternatively, it could lease the device for five years. The before-tax lease payments per year would be $80,000. The tax rate for this MegaCenter is 40 percent. From a financial perspective, should Mercy lease the surgical device or borrow the money to purchase it and why?