Securing Higher Grades Costing Your Pocket? Book Your Assignment at The Lowest Price Now!
loader
Add File

Error goes here

Files Missing!

Please upload all relevant files for quick & complete assistance.

Guaranteed Higher Grade!

Stuck on Your Question?

Get 24x7 live help from our Top Tutors. All subjects covered.

loader
250 words

Error goes here

Files Missing!

Please upload all relevant files for quick & complete assistance.

Students Who Viewed This Also Studied

13 Pages
200749 Property Investment

Question: Overview Assessment 2 aims to utilise the property investment analysis process in assessing property assets for investment purposes. Details Your client Jane Doe is keen to make her fi ...

Course

200749

Type

Course Work

Subject

Finance

University

Western Sydney University

123 Pages
ACCT868 Accounting for Financial and Managerial

You were asked to evaluate the performance of Jeanswest New Zealand for the financial years of 2017 and 2018 based on the audited financial statements submitted to the New Zealand’s Companies Of ...

Course

ACCT868

Type

Course Work

Subject

Finance

University

Auckland University of Technology

27 Pages
FIN 2054 Financial Planning

Requirements: This assignment is to be completed individually. Your answers should be unique and not resemble other students. Any form of academic dishonesty will result in a mark of zero on this ...

Course

FIN 2054

Type

Assignment

Subject

Finance

University

University of Toronto

3 Pages
INTL 702 International Banking & Finance

Bank Selected - UNION BANK OF SWITZERLAND. Qestions to be answered:- -Where there any changes to the Basel Accord after the financial crisis of 2007-2009? Discuss -What lessons were learnt from the fi ...

Course

INTL 702

Type

Home Work

Subject

Finance

University

Centennial College

FIN1014 Principles of Business Finance

Question

Answered

Task

Question 1

a) ABC Bhd. is a fast growing drug company. The company forecasts that in the next three years, its growth rates will be 30 percent, 28 percent, and 24 percent, respectively. Last week the firm declared a dividend of RM1.67 per share. After three years, the company expects a more stable growth rate of 8 percent thereafter. If the required rate of return is 14 percent, compute the current value
of the firm’s stock.
 
b) Discuss the key differences between debt and equity.
- Define debt financing and equity financing.
- Discuss the differences based on different characteristics, namely voice in management, claims on income and assets, maturity, and tax treatment.

c) Discuss the general steps for private firms to go public via initial public offering.
- Define initial public offering.
- Describes the five general steps to go public (refer to Tutorial 6).
 
Question 2

a) GM Corporation has 5.7 percent coupon bonds, making semi-annual payments and selling at 108.96 percent of par. The bond has a face value of RM2,000and mature in 16 years. What is the yield to maturity (YTM) of the bond? What is the current yield?
 
Coupons = 0.057(RM2000) = 114/2 = RM57
Bond price = 1.0896(RM2000) = RM2179.20
57(1 – 1/(1 + X)^32)/X + 2000/(1+X)^32 – 2179.20 Shift solve sum
X = 0.024431858
YTM = 0. 024431858 × 2 = 0.04886 = 4.89%
Current yield = RM114/2179.20 = 0.0523 = 5.23% 
 
b) Discuss the relationship between the current yield and YTM for a bond.
- Define current yield.
- Define yield to maturity.
- Discuss the relationship based on bond pricing, such as par, discount, and premium.

c) Discuss the factors which determine the required return on bonds.
- Briefly explain what is required return of a bond, the yield to maturity.
- Discuss the factors such as interest rate risk, future inflation and real rate of interest which might affect the required return on bonds.
 
Question 3

a) GREEN Bhd. is considering a four-year project to improve its production efficiency. Buying a new machine press for RM560,000 is estimated to result in RM210,000 in annual pre-tax cost savings. The press will be depreciated straight-line over its 4 years life span, and it will have a salvage value of RM80,000 at the end of the project. The press also requires an initial investment in working capital of RM20,000, along with an additional RM3,000 for each succeeding year of the project. The corporate tax rate is 25 percent, and the
cost of capital is 9 percent. Should the firm invest in this project?

Annual depreciation = RM560,000/4 = RM140,000
After-tax salvage value = RM80,000 (1 – 0.25) = RM60,000
OCF = RM210,000 (1 – 0.25) + 140,000 (0.25) = RM192,500 
NPV = -580,000 + 189,500(1 – 1/1.09^3)/0.09 + 281,500/1.09^4
NPV = -580,000 + 479,680.34 + 199,421.70 = RM99,102.04

The firm should invest in this project because of the positive NPV which indicate this project will add value to the firm.
 
b) BLUE Bhd. has a target debt – equity ratio of 0.60. The debt consists of 7.5 percent semi-annual coupon bonds with a maturity of 15 years and are currently selling for 95.65 percent of par. The company’s share is currently priced at RM34 per share and has a beta of 1.05. The market risk premium is 8 percent, treasury bills are yielding at 5 percent. The relevant tax rate is 21 percent. Calculate the firm’s weighted average cost of capital.
 
Market Value:
Debt/equity = 0.60
D = 0.60
E = 1.00
V = 1.60
WD = 0.60/1.6
 
c) Discuss the two conditions in which the weighted average cost of capital (WACC) is an appropriate discount rate for a project.
- Define WACC.
- Discuss the two conditions - same level of systematic risk, and same financing mix (same proportions of debt, equity and preferred stock). 
 
Question 4

a) ABC Bhd. is a fast growing drug company. The company forecasts that in the next three years, its growth rates will be 30 percent, 28 percent, and 24 percent, respectively. Last week the firm declared a dividend of RM1.67 per share. After three years, the company expects a more stable growth rate of 8 percent thereafter. If the required rate of return is 14 percent, compute the current value
of the firm’s stock.

b) Discuss the key differences between debt and equity.

c) Discuss the general steps for private firms to go public via initial public offering.
 
Question 5 

a) GM Corporation has 5.7 percent coupon bonds, making semi-annual payments and selling at 108.96 percent of par. The bond has a face value of RM2,000 and mature in 16 years. What is the yield to maturity (YTM) of the bond? What
is the current yield?

b) Discuss the relationship between the current yield and YTM for a bond.

c) Discuss the factors which determine the required return on bonds.
 
Question 6

a) GREEN Bhd. is considering a four-year project to improve its production efficiency. Buying a new machine press for RM560,000 is estimated to result in RM210,000 in annual pre-tax cost savings. The press will be depreciated straight-line over its 4 years life span, and it will have a salvage value of RM80,000 at the end of the project. The press also requires an initial investment in working capital of RM20,000, along with an additional RM3,000 for each succeeding year of the project. The corporate tax rate is 25 percent, and the
cost of capital is 9 percent. Should the firm invest in this project?
 
b) BLUE Bhd. has a target debt – equity ratio of 0.60. The debt consists of 7.5 percent semi-annual coupon bonds with a maturity of 15 years and are currently selling for 95.65 percent of par. The company’s share is currently priced at RM34 per share and has a beta of 1.05. The market risk premium is 8 percent, treasury bills are yielding at 5 percent. The relevant tax rate is 21 percent. Calculate the firm’s weighted average cost of capital.

c) Discuss the two conditions in which the weighted average cost of capital (WACC) is an appropriate discount rate for a project.

FIN1014 Principles of Business Finance

Answer in Detail

Solved by qualified expert

Get Access to This Answer

Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Hac habitasse platea dictumst vestibulum rhoncus est pellentesque. Amet dictum sit amet justo donec enim diam vulputate ut. Neque convallis a cras semper auctor neque vitae. Elit at imperdiet dui accumsan. Nisl condimentum id venenatis a condimentum vitae sapien pellentesque. Imperdiet massa tincidunt nunc pulvinar sapien et ligula. Malesuada fames ac turpis egestas maecenas pharetra convallis posuere. Et ultrices neque ornare aenean euismod. Suscipit tellus mauris a diam maecenas sed enim. Potenti nullam ac tortor vitae purus faucibus ornare. Morbi tristique senectus et netus et malesuada. Morbi tristique senectus et netus et malesuada. Tellus pellentesque eu tincidunt tortor aliquam. Sit amet purus gravida quis blandit. Nec feugiat in fermentum posuere urna. Vel orci porta non pulvinar neque laoreet suspendisse interdum. Ultricies tristique nulla aliquet enim tortor at auctor urna. Orci sagittis eu volutpat odio facilisis mauris sit amet.

Tellus molestie nunc non blandit massa enim nec dui. Tellus molestie nunc non blandit massa enim nec dui. Ac tortor vitae purus faucibus ornare suspendisse sed nisi. Pharetra et ultrices neque ornare aenean euismod. Pretium viverra suspendisse potenti nullam ac tortor vitae. Morbi quis commodo odio aenean sed. At consectetur lorem donec massa sapien faucibus et. Nisi quis eleifend quam adipiscing vitae proin sagittis nisl rhoncus. Duis at tellus at urna condimentum mattis pellentesque. Vivamus at augue eget arcu dictum varius duis at. Justo donec enim diam vulputate ut. Blandit libero volutpat sed cras ornare arcu. Ac felis donec et odio pellentesque diam volutpat commodo. Convallis a cras semper auctor neque. Tempus iaculis urna id volutpat lacus. Tortor consequat id porta nibh.

Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Hac habitasse platea dictumst vestibulum rhoncus est pellentesque. Amet dictum sit amet justo donec enim diam vulputate ut. Neque convallis a cras semper auctor neque vitae. Elit at imperdiet dui accumsan. Nisl condimentum id venenatis a condimentum vitae sapien pellentesque. Imperdiet massa tincidunt nunc pulvinar sapien et ligula. Malesuada fames ac turpis egestas maecenas pharetra convallis posuere. Et ultrices neque ornare aenean euismod. Suscipit tellus mauris a diam maecenas sed enim. Potenti nullam ac tortor vitae purus faucibus ornare. Morbi tristique senectus et netus et malesuada. Morbi tristique senectus et netus et malesuada. Tellus pellentesque eu tincidunt tortor aliquam. Sit amet purus gravida quis blandit. Nec feugiat in fermentum posuere urna. Vel orci porta non pulvinar neque laoreet suspendisse interdum. Ultricies tristique nulla aliquet enim tortor at auctor urna. Orci sagittis eu volutpat odio facilisis mauris sit amet.

Tellus molestie nunc non blandit massa enim nec dui. Tellus molestie nunc non blandit massa enim nec dui. Ac tortor vitae purus faucibus ornare suspendisse sed nisi. Pharetra et ultrices neque ornare aenean euismod. Pretium viverra suspendisse potenti nullam ac tortor vitae. Morbi quis commodo odio aenean sed. At consectetur lorem donec massa sapien faucibus et. Nisi quis eleifend quam adipiscing vitae proin sagittis nisl rhoncus. Duis at tellus at urna condimentum mattis pellentesque. Vivamus at augue eget arcu dictum varius duis at. Justo donec enim diam vulputate ut. Blandit libero volutpat sed cras ornare arcu. Ac felis donec et odio pellentesque diam volutpat commodo. Convallis a cras semper auctor neque. Tempus iaculis urna id volutpat lacus. Tortor consequat id porta nibh.

Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Hac habitasse platea dictumst vestibulum rhoncus est pellentesque. Amet dictum sit amet justo donec enim diam vulputate ut. Neque convallis a cras semper auctor neque vitae. Elit at imperdiet dui accumsan. Nisl condimentum id venenatis a condimentum vitae sapien pellentesque. Imperdiet massa tincidunt nunc pulvinar sapien et ligula. Malesuada fames ac turpis egestas maecenas pharetra convallis posuere. Et ultrices neque ornare aenean euismod. Suscipit tellus mauris a diam maecenas sed enim. Potenti nullam ac tortor vitae purus faucibus ornare. Morbi tristique senectus et netus et malesuada. Morbi tristique senectus et netus et malesuada. Tellus pellentesque eu tincidunt tortor aliquam. Sit amet purus gravida quis blandit. Nec feugiat in fermentum posuere urna. Vel orci porta non pulvinar neque laoreet suspendisse interdum. Ultricies tristique nulla aliquet enim tortor at auctor urna. Orci sagittis eu volutpat odio facilisis mauris sit amet.

Tellus molestie nunc non blandit massa enim nec dui. Tellus molestie nunc non blandit massa enim nec dui. Ac tortor vitae purus faucibus ornare suspendisse sed nisi. Pharetra et ultrices neque ornare aenean euismod. Pretium viverra suspendisse potenti nullam ac tortor vitae. Morbi quis commodo odio aenean sed. At consectetur lorem donec massa sapien faucibus et. Nisi quis eleifend quam adipiscing vitae proin sagittis nisl rhoncus. Duis at tellus at urna condimentum mattis pellentesque. Vivamus at augue eget arcu dictum varius duis at. Justo donec enim diam vulputate ut. Blandit libero volutpat sed cras ornare arcu. Ac felis donec et odio pellentesque diam volutpat commodo. Convallis a cras semper auctor neque. Tempus iaculis urna id volutpat lacus. Tortor consequat id porta nibh.

31 More Pages to Come in This Document. Get access to the complete answer.

MyAssignmenthelp.com has achieved the status of the best essay writing service because of an unbreakable record of delivering high-class service. Our efficient team of essay writers are based in different countries including the USA, UK and Australia. We have build teams of native essay writers to deliver country-specific, universities' requirement based custom essay help. Other than making sure that students get customised solutions. We deliver requirement based solutions and ensure that the price remains reasonable so that students can readily access our services. Because of our flexible approach, students who search the internet with search terms like write my essay at a cheap rate, find our service most in sync with their demands.

More FIN1014 FIN1014 Principles of Business Finance: Questions & Answers

Q
icon

We aren't endorsed by this University

200749 Property Investment

Question: Overview Assessment 2 aims to utilise the property investment analysis process in assessing property assets for investment purposes. Details Your client Jane Doe is keen to make her first property investment in Australia. She is considering buying a residential property and rent it o ...

View Answer
Q
icon

We aren't endorsed by this University

ACCT868 Accounting for Financial and Managerial

You were asked to evaluate the performance of Jeanswest New Zealand for the financial years of 2017 and 2018 based on the audited financial statements submitted to the New Zealand’s Companies Office in September 2019. (See attached audited statements of Jeanswest New Zealand). Required: Comp ...

View Answer
Q
icon

We aren't endorsed by this University

FIN 2054 Financial Planning

Requirements: This assignment is to be completed individually. Your answers should be unique and not resemble other students. Any form of academic dishonesty will result in a mark of zero on this assignment. For each scenario, recommend the ONE insurance product that you think best fits the ne ...

View Answer
Q
icon

We aren't endorsed by this University

INTL 702 International Banking & Finance

Bank Selected - UNION BANK OF SWITZERLAND. Qestions to be answered:- -Where there any changes to the Basel Accord after the financial crisis of 2007-2009? Discuss -What lessons were learnt from the financial crisis of 2007-2009 and what steps have been taken to date regarding the improvement of the ...

View Answer

Content Removal Request

If you are the original writer of this content and no longer wish to have your work published on Myassignmenthelp.com then please raise the content removal request.

Choose Our Best Expert to Help You

icon

5% Cashback

On APP - grab it while it lasts!

Download app now (or) Scan the QR code

*Offer eligible for first 3 orders ordered through app!

screener
ribbon
callback request mobile
Have any Query?