Marketing For Compet Assignment
Decisions involving capital expenditures often require managers to weigh the costs and benefits of different options related to the financing of a project. For instance, deciding when to call a bond before maturity due to changing interest rates can lower the overall cost of a project significantly through refinancing. So, it is important to be able to understand the real interest rate being paid out to your bondholders (yield) at any given time.
For this Assignment, review the information presented in Problem 7-18 on page 267 of your course text. You will utilize the information in this readings and media to make a recommendation with regard to when to call a bond.
• Prepare a spreadsheet using Excel or a similar program in which you compute the items listed in parts a, b, and d. Be sure to compute the Yield-to-Maturity (YTM) and Yield-to-Call (YTC) for each of years 5, 6, 7, 8, and 9.
• Utilizing Word, prepare a written report to your finance director:
o Include a detailed explanation of the conclusion you reached concerning whether or not to call the bond before maturity.
o If your recommendation is to call the bond early, explain when to call the bond and your rationale.
o Discuss the advantages and disadvantages of using a long-term loan instead of a bond.
Text Book: Fundamentals of Financial Management by Eugene F. Brigham and Joel F. Houston, Fifteenth edition.
Format your assignment according to the following formatting requirements:
1. The answer should be typed, double spaced, using Times New Roman font (size 12), with one-inch margins on all sides.
2. The response also includes a cover page containing the title of the assignment, the student's name, the course title, and the date. The cover page is not included in the required page length.
3. Also include a reference page. The Citations and references should follow APA format. The reference page is not included in the required page length.