Corporate Finance #13 Investment Banking & Long-Term Debt

Investment bankers connect corporations needing capital with investors, design packaged securities, and underwrite offerings. They distribute through syndicates, market makers, brokers, and provide advisory services for mergers, acquisitions, and restructurings.

Explore pricing the security and dilution, assess how issuing more common stock affects earnings per share, and how market stabilization via repurchases and shelf offerings shapes strategic timing.

Explore the trade-offs between public and private financing, including IPOs, SEC filings, liquidity, and capital access, and examine private placements and leveraged buyouts for going private.

Explore debt financing through corporate bonds, with par value, coupon rate, and maturity date. Compare secured and unsecured debt, seniority, and repayment methods like serial payments and sinking funds.

Analyze bond prices, yields, and ratings to guide corporate debt financing under market conditions. Compare coupon rates, maturities, yield to maturity, and ratings from Moody's, S&P, and Fitch.

Explore the bond refunding decision: refinance callable bonds at lower rates, compare net present value, cash flows, taxes, and timing to determine optimal long-term debt strategy.

Explore zero coupon and floating rate bonds, including pricing at a discount, lack of periodic interest, tax considerations, and investor and issuer advantages and risks under long-term debt financing.

Compare debt financing with equity financing, noting tax-deductible interest and well-specified debt terms. Consider inflation, refinancing options, and the impact on the cost of capital and stock value.

Learn how leasing can act as debt financing, distinguish capital from operating leases, and meet GAAP/FASB reporting and footnote requirements through substance versus form.

Compute a bond's coupon rate, current yield, and yield to maturity using present-value calculations and Excel tools like go seek and rate function, then compare current yield with YTM.

Compare the coupon rate, current yield, and yield to maturity of bonds A and B, using par values, market prices, and maturities to illustrate present value concepts.

Calculate the price of multiple semiannual bonds using present value of the annuity and principal, applying a 15% coupon, 11% market rate, 20 years, and 92 bonds.

Calculate the price of a semiannual callable debenture using present value of annuity payments and the 1300 call price. Analyze how the call option affects pricing under a 7% yield.

Demonstrates how downgrading a bond from AAA to AA3 raises the market rate from 9% to 11%, causing the bond price to fall at a present-value, semiannual coupon framework.

Calculate the price of a zero coupon bond with a face value of 1000 and 15 years to maturity at 10% market rate using present value, noting inverse rate-price relationship.

Compute the effective yield to maturity for a zero coupon bond using present value or future value methods, with 550 sales price and 10 years to maturity.

Analyze how inflation affects borrowing by tracking a $100,000 loan over 15 years at 5 percent, using present value, future value, and cumulative inflation calculations.

analyze margin buying of a 9% coupon bond with 20-year maturity, 20% cash, 80% loan, and selling after rate move to 8%, including present value of coupons and principal.

Evaluate a bond refunding decision using net present value, call premium, underwriting costs, and tax impacts to compare old vs new financing in corporate finance.

Assess bond refunding decision by comparing old bonds at 13 percent with a lower rate. Evaluate costs, call premium, underwriting fees, taxes, and net present value to decide refinancing viability.

Compare capital lease versus operating lease to determine capitalization on the balance sheet using a practice problem, analyzing lease period, asset life, and present value of payments.

Show how capital lease versus operating lease affects the balance sheet, including asset and liability changes and the resulting debt ratio and debt-to-equity implications.

Explore bond calculations in Excel, including coupon rate, current yield, and yield to maturity, using present value of coupons and the par value, with Goal Seek and rate function.

Explore how to compute bond coupon rate, current yield, and yield to maturity using Excel in a guided practice problem.

Learn to price multiple semiannual bonds in Excel by computing the present value of coupon payments and the principal, then scale the price by 92 bonds for the total value.

Compute the price of callable debentures using bond present value methods in Excel, with semiannual 12% coupons, a 1000 face value, 7% yield, 20 years, and a 1300 callable cap.

Analyze how a downgrade from AAA to AA changes a bond's price, using present value of semiannual interest and principal under a higher market rate from 9% to 11%.

Demonstrates how to price a zero-coupon bond by discounting the face value of 1000 at the market yield over 15 years, illustrating the inverse relationship between rate and price.

Explore calculating the effective yield to maturity of a zero coupon bond using excel, presenting methods with present value and future value formulas, rate function, and goal seek.

Explore how inflation affects borrowing with an Excel practice problem, computing cumulative inflation, future value and present value to assess borrowing purchasing power over 15 years.

Explore a corporate finance margin bond purchase: buy at 1050 with 20% cash and 80% loan, sell at 8% market rate, and compute price, profit, and cash return.

Evaluate a bond refinancing decision by comparing bonds at 14% with issues at 12%, accounting for call premium, underwriting costs, tax effects, and present value analysis over 10 years.

Evaluate the corporate bond refunding decision by comparing call premium, underwriting costs, and tax effects, computing the present value of tax savings under an 11% discount rate over 18 years.

Evaluate capital lease versus operating lease determinations using Excel, applying present value of lease payments against asset market value and asset life to decide capitalization.

Compare capital lease vs operating lease impacts on the balance sheet by calculating the present value of lease payments and examining debt to asset and debt to equity ratios.

Learn to compute the lease payment in Excel for corporate finance using present value and payment functions, with goal seek to hit a 150,000 target at 13% over 25 years.