User Account

All Pages

What is the expected price of the common share

Assignment Help Financial Accounting
Reference no: EM132860962

Question -

a) The Chief Financial Officer ("CFO") of a local listing company wants to raise fund for the company by issuing bond. It is an 8-year bond with face value of $1,000. The annual coupon rate is 10% p.a. which will be paid semi-annually. Required rate (discount rate) of investor on the bond with similar risk is 12% per annum. Assume there is no fees or costs for bond issue, calculate the cash proceeds from the bond issuance. Besides, if the market price of the bond is $800, would you consider to purchase the bond? Explain.

b) The CFO also considers issuing additional common share for fund raising. The common share has $40 par value per share and the expected dividend yield is 6% per annum. The CFO assumes the company earnings will grow at 3% p.a. constantly. What is the expected price of the common share if the discount rate is also 10% per annum?

c) If you are holding the common share and the market price is $40, what would be the market expected dividend growth rate? Should you buy or sell of the common share? Explain.

Reference no: EM132860962

Questions Cloud

Major domains of philosophy : Now that we are familiar with some aspects of critical thinking and also the major domains of philosophy,
Identify opportunities for alliances with other agencies : Address issues such as globalization and how those issues might impact the strategic goals of agency, organization, or community. Identify potential alliance.
What were the usual roles for men and women raising families : Conduct research on major events and societal norms and trends that elderly people have most likely experienced. For instance, what was it like to experience
Different methods of acquiring customers via electronic : What are the different methods of acquiring customers via electronic media?
What is the expected price of the common share : The CFO assumes the company earnings will grow at 3% p.a. constantly. What is the expected price of the common share if the discount rate is also 10% per annum
Write a brief overview of totemism and animism : Write a brief overview of totemism and animism; make sure to show how they differ and where they overlap. how these belief systems consider the reality
What emic and etic mean in terms of cultural interaction : Describe what "emic" and "etic" mean in terms of cultural interaction. Give an example of yourself as "emic" and of an experience in which you have felt "etic."
Should agencies increase the hiring age : Is 18 years of age too young for a correctional officer? Should agencies increase the hiring age? Why, or why not?
What impact will brexit have on the irish printing companies : The print and packaging sector has encountered a turbulent 10 years, but it is, however, an industry that is not averse to change.

Reviews

Write a Review

Financial Accounting Questions & Answers

  Financial statement analysis and preparation

Financial Statement Analysis and Preparation

  Shareholder of a company

Describe the ways that a person can become a shareholder of a company. Why Wal-Mart would split its stock?

  Financial and accounting principles

An understanding of financial and accounting principles can be a valuable tool for managers. While not all managers will find themselves calculating financial ratios or preparing annual financial data.

  Prepare a statement of cash flow using the direct method

Prepare a Statement of Cash Flow using the Direct Method and Prepare the Operations section of the Statement of Cash Flow using the Indirect Method.

  Financial accounting assignment

This assignment has one case study and two question apart from case study. Questions related to document Liquidation question and Company financial statements question - Torquay Limited

  Prepare general journal entries for goela

Prepare general journal entries for Goela Ltd

  Principles of financial accounting

Prepare the journal entry to record the acquisition of the assets.

  Prepare general journal entries to record the transactions

Prepare general journal entries to record the transactions, assuming use of the periodic inventory system

  Global reporting initiative

Compare the view espoused by the economist Milton Friedman about the social responsibilities of business with the views express by Stigler.

  Explain the iasb conceptual frameworks

Explain the IASB Conceptual Framework's perspective of users and their decisions.

  Determine the company''s financial statements

T he focus of the report is to determine the extent to which you are comfortable relying on the financial statements as presented by management .

  Computation of free cash flow

Computation of Free Cash Flow

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd