I have an assignment that is due later today..but unfortunately I had to work, which leaves me with no time to do this assignment. Can some of you please help me? Its not too difficult..its just the matter of time thats killing me
I have to pass this to take the exam in Basic Finance.
So here goes the questions:
1.Bond yields
Seether plc wants to issue new 20-years bonds for some much-needed expansion projects. The company currently has 8 per cent coupon bonds on the market that sells for £93000 with a par value of £100000, make semi-annual payments, and mature in 20 years. What coupon rate should the company set on its new bonds if it wants them to sell at par?
2.Equity valuation – non-constant growth
Metallica Bearings plc is a young start-up company. No dividends will be paid on the equity over the next nine years, because the firm needs to plough back its earnings to fuel growth. The company will pay £1 per share in dividend in 10-years, and will increase the dividend by 5 per cent per year thereafter. If the required return on the this equity is 16 per cent, what is the current share price?
3.For the following cash flows, what is the NPV if the discount rate is zero per cent? If it is 5 per cent? If it is 15 per cent? If it is 25 per cent?
Year: Cash Flow (£):
0 -19500
1 9800
2 10300
3 8600
4. Project evaluation
The following problem is common in the mobile industry. You are required to assess the viability of two new car lines. Your company cannot afford to undertake both projects and must choose one only. The appropriate discount rate is 12 per cent for this investment. Assume the cash flows occur at the end of the period.
Year: People Carrier: SUV:
0 -200000 -500000
1 300000 300000
2 100000 250000
4 100000 250000
I reaaaaally, reaally cannot describe how much it will mean if you guys help me.
I have to pass this to take the exam in Basic Finance.So here goes the questions:
1.Bond yields
Seether plc wants to issue new 20-years bonds for some much-needed expansion projects. The company currently has 8 per cent coupon bonds on the market that sells for £93000 with a par value of £100000, make semi-annual payments, and mature in 20 years. What coupon rate should the company set on its new bonds if it wants them to sell at par?
2.Equity valuation – non-constant growth
Metallica Bearings plc is a young start-up company. No dividends will be paid on the equity over the next nine years, because the firm needs to plough back its earnings to fuel growth. The company will pay £1 per share in dividend in 10-years, and will increase the dividend by 5 per cent per year thereafter. If the required return on the this equity is 16 per cent, what is the current share price?
3.For the following cash flows, what is the NPV if the discount rate is zero per cent? If it is 5 per cent? If it is 15 per cent? If it is 25 per cent?
Year: Cash Flow (£):
0 -19500
1 9800
2 10300
3 8600
4. Project evaluation
The following problem is common in the mobile industry. You are required to assess the viability of two new car lines. Your company cannot afford to undertake both projects and must choose one only. The appropriate discount rate is 12 per cent for this investment. Assume the cash flows occur at the end of the period.
Year: People Carrier: SUV:
0 -200000 -500000
1 300000 300000
2 100000 250000
4 100000 250000
- Based on the pay back period, which project should be taken?
- Based on the NPV, which project should be taken?
- Based on IIR, which project should be taken?
I reaaaaally, reaally cannot describe how much it will mean if you guys help me.