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Question - Answer the following questions. You need to show all the workings.
a. Cahaya Corporation just paid a dividend yesterday of RM2 per share. The management of Cahaya expects the dividend will be RM3 for next year and RM4 on the following year. After that the dividend is expected to grow inde?nitely by 5% per year for the foreseeable future. Determine what is the value of the shares to an investor with a required rate of return of 10%.
b. Gegar Bunyi Corporation is investing in a major capital budgeting project that will require the expenditure of RM16 million. The money will be raised by issuing RM2 million of bonds. RN14 million of preferred shares and RM10 millions of new ordinary shares. The company estimates that after-tax cost of debt will be 7%, cost of preferred shares 9% and the cost of new issues of ordinary shares 17%. Determine the weighted average cost of capital (WACC) for this project.
Hubbard argues that the Fed can control the Fed funds rate, but the interest rate that is important for the economy is a longer-term real rate of interest. How much control does the Fed have over this longer real rate?
Coures:- Fundamental Accounting Principles: - Explain the goals and uses of special journals.
Accounting problems, Draw a detailed timeline incorporating the dividends, calculate the exact Payback Period b) the discounted Payback Period. the IRR, the NPV, the Profitability Index.
Term Structure of Interest Rates
Write a report on Internal Controls
Prepare the bank reconciliation for company.
Create a cost-benefit analysis to evaluate the project
Theory of Interest: NPV, IRR, Nominal and Real, Amortization, Sinking Fund, TWRR, DWRR
Distinguish between liquidity and profitability.
Your Corp, Inc. has a corporate tax rate of 35%. Please calculate their after tax cost of debt expressed as a percentage. Your Corp, Inc. has several outstanding bond issues all of which require semiannual interest payments.
Simple Interest, Compound interest, discount rate, force of interest, AV, PV
CAPM and Venture Capital
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