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Financial Planning

Words: 1896 Length: 6 Pages Document Type: Case Study Paper #: 56724567

Debt Management and Retirement Planning
It is very important for Howe to pay all their debts and free themselves of the liability since a lot of loan like credit card loan, car loan, student loan, are hampering Howes to save up more. If they have plans for retiring in 22 years, they need to free themselves of all the loans and credit they have on them, thus saving up the interest money that goes out monthly. They can use that money for other expenses and purposes. In short term they might feel like they have lesser funds but they can have the relief that they don’t own anything to anyone and focus on saving for their future. There will be one more debt addition because of Pat’s college education, so it’s better they slowly focus on paying off the loans first and then proceed to making progress with the savings…… [Read More]

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Jagdambay Manufacturing and Bond Evaluation

Words: 1446 Length: 5 Pages Document Type: Essay Paper #: 94965035

Case Study
Part I
Suppose Jagdambay manufacturing sells a bond paying a coupon rate of 5% per year with par value (face value) of $200,000 when the market rate is only 4% per year. The bond has 5 years until maturity.
What is the bond’s price today if market rate is 5%? Show your computations
The issuance of bonds is done with a fixed par value and the dividends paid out to preferred stockholders is done on the basis of a percentage of that par value at a fixed rate. The present day bond price is calculated as follows:
Bond Price = c / (1 + i) + c / (1 + i)2 + …+ c / (1 + i)n + M / (1 + i)n
In this case,
C is the coupon payment = $200,000
I is the interest rate = 5 percent
M is the value at maturity…… [Read More]

References
Investopedia.com (n.d.). Bond basics. Retrieved from: http://www.investopedia.com/university/bonds/
Investopdia. (n.d.). Bond Laddering. Retrieved from: https://www.investopedia.com/terms/b/bondladdering.asp
Woodside. (2009). Woodside to Issue $US 1 Billion in Corporate Bonds. Retrieved from: http://www.woodside.com.au/Investors-Media/Announcements/Documents/25.02.2009%20Woodside%20to%20Issue%20US$1%20Billion%20in%20Corporate%20Bonds.pdf
Investopedia. (2017). Why do interest rates tend to have an inverse relationship with bond prices? Retrieved from: https://www.investopedia.com/ask/answers/04/031904.asp