Anyone here in Finance??

[Firm]

So I am in this 3rd year finance class....Doing our first major assignment and I am stuck on 2 questions....If anyone knows this stuff I'll be seriously impressed, lol. Plus I'd really appreciate any help.
See below questions.....#7 I am completely at a loss....#9 I tried for like 2 hours but it doesn't seem that hard, I must be missing something stupid?

7. (challenging) You are a bond trader for an investment bank. A client calls you up and asks for the quote of a zero-coupon bond which pays off $100,000 in two years. Although no such bonds exist, you notice that a 10% coupon bond with face value of $1,000 and matures next year costs $1,047.62. You also find an 8% coupon bond with face value $1,000 that matures in two years and costs $1,074.23. The coupons on both bonds are paid on an annual basis. Show how you could create the 2-year pure discount bonds for your client using the 2 bonds above, and calculate the price should you quote the client in order for you to break even? (Assume you can buy a fraction of a bond if necessary)

9.
Use the following actual 2007 income and balance sheets and initial projected proforma income and balance sheets to complete the proforma 2008 income and balance sheets.

Complete the income and balance sheets for 2008 assuming all new funding will be in the form of debt which has a annual interest rate of 10% - state explicitly how much new debt funding the firm will need in 2008. Assume that dividends are maintained at 2007 levels. Existing debt also has a 10% annual interest rate.


Income Statement

2007 projected ‘08
SALES 1,000,000 1,200,000
- Cost of Goods Sold (CGS) 600,000 650,000
- Selling, General and Admin. Expense 100,000 120,000
- Depreciation 200,000 230,000
----------------------------------------- ----------- ---------
= EBIT 100,000 200,000
- Interest 50,000 ?
- Taxes (25%) 12,500 ?
----------------------------------------- ----------- ---------
= Net Income 37,500 ?
- Dividend Payments 25,000 25,000
----------------------------------------- ----------- ---------
= Retained Earnings 12,500 ?

Balance Sheet


Assets
2007
Projected 2008
Liab+Equity
2007

Projected 2008
Cash
100,000
130,000
Liabilities


Equip. Gross
1,000,000
1,400,000
Bank Loan
500,000
?
- Acc. Depreciation
-200,000
-430,000
Equity


Equipment Net
800,000
970,000
Equity Invest.
300,000
300,000



Retained Earnings
100,000
?






Total Assets
900,000
1,100,000
Total L+E
900,000
?

[xJuice]

Your mom

[Firm]

Thanks, that helps alot.

I used excel to kinda 'cheat' an answer to #9 but I'd still like to see what anyone else has to say about it so I can understand the answer.

[MeltingPlastic]

i can tell you right now if i knew what the hell the whole cost thing is associated with bonds i could solve #7, thats just simple algebra how many of x and how many of y will give you z! just write z as a function of x and y and plot it and figure out where your max is and bam!

[ENVY22]

I'm in a graduate accounting program and currently in a required finance class. That shit sucks. My brain just doesn't work that way.

[ka_jd7and1]

Quote: Originally Posted by MeltingPlastic

i can tell you right now if i knew what the hell the whole cost thing is associated with bonds i could solve #7, thats just simple algebra how many of x and how many of y will give you z! just write z as a function of x and y and plot it and figure out where your max is and bam!

I've been looking at it and I think there's more to it than that.

[dannyboy954]

That shit right there is exactly why I have a degree in economics and not finance. lol

[Firm]

lol....damn.
Yeah he's on the right track with 7....but there is something more to it :S

[dimedragin22s]

i should of toke finance or something math is so easy for me, once i do it once i get it, i help my girl with her college math stuff all the time and she gets mad when i do it so quick after she been spenting hours on it

[LiquidFusion]

The first letter of Finance is F, which is probably the grade I'd get in classes like these.

[Firm]

Nobody huh??? Damn, that sucks......Guess I'll put some more time into it on Thursday and see if I can figure it out.