3. A NUK Corporation bond has a 6 percent coupon rate and a $1,000 face value. Interest is paid semiannually, and the bond has 3 years to maturity. If investors require a 7 percent yield, what is the bond’s value? What is the effective annual yield on the bond?

5. Suppose the NUK Corporation has decided in favor of a capital restructuring that involves increasing its existing $70 million in debt to $100 million. The interest rate on the debt is 8 percent and is not expected to change. The firm currently has 8 million shares outstanding, and the price per share is $40. If the restructuring is expected to increase the ROE (return on equity), what is the minimum level for EBIT (earnings before interest and tax) that NUK’s management must be expecting? Ignore taxes in your answer.

3. A NUK Corporation bond has a 6 percent coupon rate and a $1,000 face value. Interest is paid semiannually, and the bond has 3 years to maturity. If investors require a 7 percent yield, what is the bond’s value? What is the effective annual yield on the bond?

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