19) You are given the following information regarding UFSK limited, a listed entity. I Number of outstanding shares 100 000 Earnings 300 000 Retention ratio 60% 91-day Treasury bill rate 6% Market risk premium 8% UFSK Beta 1.2 Dividend growth rate stable phase 5% Bonds outstanding 5 000 Par value per bond 1000 Sermi-annual coupon rate on bonds 6% Bond yleld to maturity 8% Bond years remaining to maturity 4 Сегрогate tax rate 30% Additional information • UFSK limited recently paid a dividend • UFSK recently signed a deal and expects a super normal gronth in eamings. The company expects earnings to grow by 8% for the first two years then decline by 2% in the following year, there after a stable growth of 5% is expected into the future Required a) As an investment analyst advise your client how much must she expect to pay for UFSK limited stock b) Ascertain the market value of UFSK imited equity. c) Determine the fair value of UFSK imited bond d) Determine the total value of the company's debt e) Determine the total value of UFSK imited
19) You are given the following information regarding UFSK limited, a listed entity. I Number of outstanding shares 100 000 Earnings 300 000 Retention ratio 60% 91-day Treasury bill rate 6% Market risk premium 8% UFSK Beta 1.2 Dividend growth rate stable phase 5% Bonds outstanding 5 000 Par value per bond 1000 Sermi-annual coupon rate on bonds 6% Bond yleld to maturity 8% Bond years remaining to maturity 4 Сегрогate tax rate 30% Additional information • UFSK limited recently paid a dividend • UFSK recently signed a deal and expects a super normal gronth in eamings. The company expects earnings to grow by 8% for the first two years then decline by 2% in the following year, there after a stable growth of 5% is expected into the future Required a) As an investment analyst advise your client how much must she expect to pay for UFSK limited stock b) Ascertain the market value of UFSK imited equity. c) Determine the fair value of UFSK imited bond d) Determine the total value of the company's debt e) Determine the total value of UFSK imited
Chapter6: Fixed-income Securities: Characteristics And Valuation
Section: Chapter Questions
Problem 13P
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