CHAPTER 8 VALUING BONDS DATA CASE Present By 陳俊諺 郭又勳

Issue $50 million of 12% annual coupon bonds with 10-year maturity The Firm anticipates an increase in its bond rating. Compute the additional cash if the rating is increase Determine firm’s current rating and YTM To compute the present value of each year. Spot Rates Additional Cash Rating and Yield Higher Rating

Rating By

Treasury Yield + spreads = Firm’s Yield ( ( Search using the term “yield curve”. Select the nominal rates.

Treasury Yield + spreads = Firm’s Yield ( ( Click “Today’s Market” Click “US Corporate Bond Spreads” 1/100th of a percentage point (0.01%)

Treasury Yield + spreads = Firm’s Yield ( ( Rating1 yr2 yr3 yr5 yr7 yr10 yr30 yr Ba2/BB Ba3/BB B1/B B2/B B3/B Caa/CCC US Treasury Yield X 0.01% Firm Yield ( Current ) X 0.01% Firm Yield ( Raise )

The Firm’s Every Yield by Linearly interpolating 1BCDEFGHIJK 21 yr2 yr3 yr4 yr5 yr6 yr7 yr8 yr9 yr10 yr Firm Yield AVERAGE(D5,F5) H5+((K5-H5)/3) 備註:此估計值是假設線性情況而非實值

The Firm’s Yield to Every Year’s Spot Rates Year Current SP Raise SP

Using the Spot Rates to Calculate CF-PV Year Current SP Raise SP Cash Flow Current CFPV Raise CFPV ( 可利用此公式求各年現金流現值 ) Using the CFPV to Calculate Bond PV Total CF Current CFPV Raise CFPV Additional Cash

如果評等提升會產生什麼影響? 1. 從 Data case 發現，將有Additional Cash = 直接影響到公司籌資的進度 (可提升) 3. 增加公司募集的資金，可以去做更多的運用。