Reference no: EM132534032
Question 1: CJA Corporation issued a 5-year, P5,500,000 face value bonds. The bond has a coupon rate of 8%. The effective interest rate of this bond issuance is 9%. What is the value of the bonds as of issuance date?
Question 2: CJA Stock assures investors a yearly dividend of P210. Generally, investors require a 14% return from CJA. What would the value of the stock be after five years?
Question 3: The stock of CJA Golf World currently sells for P90 per share. The firm has a constant dividend growth rate of 6% and just paid a dividend of P5.09. You are unsure about the stock's required rate of return. What will the stock sell for one year from now?
Question 4: A company currently has 20-year bonds outstanding. The bonds have an 8.5 percent annual coupon, a face value of P1,000, and they currently sell for P945. The tax rate is 30%. The company's after-tax cost of debt is closest to?
Question 5: CJA Corporation issued 10,000 pieces of 9%, P1,000 par value preferred shares through an underwriter. The underwriter collected P10,500,000 but charged a fee of P200,000. What is the effective cost of the preferred shares?
Question 6: The risk-free rate and the expected market rate of return are 6% and 12%, respectively. According to the capital asset pricing model (CAPM), the expected rate of return on security X with a beta of 1.2 is equal to?
Question 7: The company-issued bonds yield 10% while the treasury bonds yield 7%. Overall, the market provides a return of 18%. Company investors, however, determined that they are willing to accept at least 9% higher returns than their creditor counterpart in the company. Using the bond yield plus risk premium, what is the expected return of the investors?
Question 8: CJA Inc. has P5,000,000 total assets. It has a debt ratio of 40%. Shareholders expected an 18% return on investment while the effective interest rate of its debt is 8%. Current liabilities are immaterial. Tax rate is at 30%. The weighted average cost of capital of CJA is closest to?
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