Jackson Corporation Computations Finance Questions

Jackson Corporation Computations Finance Questions

Order ID	53003233773
Type	Essay
Writer Level	Masters
Style	APA
Sources/References	4
Perfect Number of Pages to Order	5-10 Pages

Description/Paper Instructions

Jackson Corporation Computations Finance Questions

Jackson Corporation sources and distributes pharmaceutical products in the United States and internationally. Its pharmaceutical distribution segment distributes brand-name and generic pharmaceuticals, over-the-counter healthcare products, home healthcare supplies and equipment, outsourced compounded sterile preparations, and related services to various healthcare providers.

The company wants to raise long-term debt of $10 million for research and development by issuing corporate bonds. The financial manager of the company, Chris Doughman, MBA is working with First Investment Bank to issue the bonds. The investment bank is providing consulting and advisory services to Jackson Corporation. Chris must make presentations to the investment banking firm to enable it to get the information needed to prepare the bond indenture.

Chris stated in the presentation that the bond would have 15 years to maturity, interest would be paid annually, and the bonds would have $1,000 par value. The coupon interest rate, according to Chris, would be determined using the following equation: rd= r* + IP + MRP + DRP + LP, where rd is quoted market interest rate, r* is real risk-free rate, IP is inflation premium, MRP is maturity risk premium, DRP is default risk premium, and LP is liquidity premium. Chris has gathered the following data:

Characteristic

Bond

Time to maturity

15 years

Real risk-free rate

2.00%

Inflation premium

2.20%

Maturity risk premium

2.50%

Default risk premium

2.40%

Liquidity premium

0.90%

1. Calculate the quoted market interest rate for the corporate bond using the equation.
2. Using the market interest rate calculated above, determine the coupon payment i.e., the dollar amount to be paid every year to bondholders.
3. First Investment Bank is using the answers presented in questions 1 and 2 to value the bond. Calculate the present value of the bond if the yield to maturity is 10%.
4. Suppose that three years later Jackson Corporation’s bonds have 12 years remaining to maturity. Interest is paid annually, the bonds have $1,000 par value, and the coupon interest rate is 8%. The bonds have a yield to maturity of 9%. Calculate the current market price of the bond.
5. Another company, Charter Corporation has issued 2,500 debentures with a face value of $1,000. The bonds have 10 years to maturity. The bonds have a coupon interest rate of 8% that is paid semiannually. What dollar amount of interest per bond can an investor expect to receive every 6 months?
6. Charter Corporation bonds have 10 years remaining to maturity. The bonds have a face value of $1,000 and a yield to maturity of 9%. The coupon rate is 8% that is paid semiannually.
7. Calculate the selling price of this debenture
8. Calculate the current yield of this debenture

Jackson Corporation Computations Finance Questions

RUBRIC QUALITY OF RESPONSE NO RESPONSE POOR / UNSATISFACTORY SATISFACTORY GOOD EXCELLENT Content (worth a maximum of 50% of the total points) Zero points:  Student failed to submit the final paper. 20 points out of 50:  The essay illustrates poor understanding of the relevant material by failing to address or incorrectly addressing the relevant content; failing to identify or inaccurately explaining/defining key concepts/ideas; ignoring or incorrectly explaining key points/claims and the reasoning behind them; and/or incorrectly or inappropriately using terminology; and elements of the response are lacking. 30 points out of 50:  The essay illustrates a rudimentary understanding of the relevant material by mentioning but not full explaining the relevant content; identifying some of the key concepts/ideas though failing to fully or accurately explain many of them; using terminology, though sometimes inaccurately or inappropriately; and/or incorporating some key claims/points but failing to explain the reasoning behind them or doing so inaccurately.  Elements of the required response may also be lacking. 40 points out of 50:  The essay illustrates solid understanding of the relevant material by correctly addressing most of the relevant content; identifying and explaining most of the key concepts/ideas; using correct terminology; explaining the reasoning behind most of the key points/claims; and/or where necessary or useful, substantiating some points with accurate examples.  The answer is complete. 50 points:  The essay illustrates exemplary understanding of the relevant material by thoroughly and correctly addressing the relevant content; identifying and explaining all of the key concepts/ideas; using correct terminology explaining the reasoning behind key points/claims and substantiating, as necessary/useful, points with several accurate and illuminating examples.  No aspects of the required answer are missing. Use of Sources (worth a maximum of 20% of the total points). Zero points:  Student failed to include citations and/or references. Or the student failed to submit a final paper. 5 out 20 points:  Sources are seldom cited to support statements and/or format of citations are not recognizable as APA 6th Edition format. There are major errors in the formation of the references and citations. And/or there is a major reliance on highly questionable. The Student fails to provide an adequate synthesis of research collected for the paper. 10 out 20 points:  References to scholarly sources are occasionally given; many statements seem unsubstantiated.  Frequent errors in APA 6th Edition format, leaving the reader confused about the source of the information. There are significant errors of the formation in the references and citations. And/or there is a significant use of highly questionable sources. 15 out 20 points:  Credible Scholarly sources are used effectively support claims and are, for the most part, clear and fairly represented.  APA 6th Edition is used with only a few minor errors.  There are minor errors in reference and/or citations. And/or there is some use of questionable sources. 20 points:  Credible scholarly sources are used to give compelling evidence to support claims and are clearly and fairly represented.  APA 6th Edition format is used accurately and consistently. The student uses above the maximum required references in the development of the assignment. Grammar (worth maximum of 20% of total points) Zero points:  Student failed to submit the final paper. 5 points out of 20:  The paper does not communicate ideas/points clearly due to inappropriate use of terminology and vague language; thoughts and sentences are disjointed or incomprehensible; organization lacking; and/or numerous grammatical, spelling/punctuation errors  10 points out 20:  The paper is often unclear and difficult to follow due to some inappropriate terminology and/or vague language; ideas may be fragmented, wandering and/or repetitive; poor organization; and/or some grammatical, spelling, punctuation errors 15 points out of 20:  The paper is mostly clear as a result of appropriate use of terminology and minimal vagueness; no tangents and no repetition; fairly good organization; almost perfect grammar, spelling, punctuation, and word usage. 20 points:  The paper is clear, concise, and a pleasure to read as a result of appropriate and precise use of terminology; total coherence of thoughts and presentation and logical organization; and the essay is error free. Structure of the Paper (worth 10% of total points) Zero points:  Student failed to submit the final paper. 3 points out of 10: Student needs to develop better formatting skills. The paper omits significant structural elements required for and APA 6th edition paper. Formatting of the paper has major flaws. The paper does not conform to APA 6th edition requirements whatsoever. 5 points out of 10: Appearance of final paper demonstrates the student’s limited ability to format the paper. There are significant errors in formatting and/or the total omission of major components of an APA 6th edition paper. They can include the omission of the cover page, abstract, and page numbers. Additionally the page has major formatting issues with spacing or paragraph formation. Font size might not conform to size requirements.  The student also significantly writes too large or too short of and paper 7 points out of 10: Research paper presents an above-average use of formatting skills. The paper has slight errors within the paper. This can include small errors or omissions with the cover page, abstract, page number, and headers. There could be also slight formatting issues with the document spacing or the font Additionally the paper might slightly exceed or undershoot the specific number of required written pages for the assignment. 10 points: Student provides a high-caliber, formatted paper. This includes an APA 6th edition cover page, abstract, page number, headers and is double spaced in 12’ Times Roman Font. Additionally, the paper conforms to the specific number of required written pages and neither goes over or under the specified length of the paper.
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