three years. What răte UI merEJI TU3. (a)What kind of cash flows do investors expect from their investment in government bonds?(b)What role does bond indenture plays in a bond investment?(c)Assume that a company listed on the Sunrise Stock Exchange expects to pay dividends amounting to100 shillings per share next year, shillings 200 in the year that follows and 250 shillings in the followingyear. After that, dividends are expected to grow at constant 5% per year. If the required rate of return is10%, what price should investors pay for such shares today?4. Suppose a firm is considering a project that would require an initial cash outlay of 15 million shillings andexpected to generate shs 4.5 million each year for the next 4 years. The firm assumes that the pricesand costs increases at the same rate and that the required rate of return expressed in nominal terms is14%.The firm also practices a policy whereby cash flows are stated at the prices of period zero. Theinflation rate is expected to be 5%.(a)Outline two ways in which the effects that inflation has on the acceptability of investment projectscould be considered.(b)Using the NPV technique, is the project worth taking? What have you learned from your analysis asfar as treating inflation in investment analysis is concerned?/2021 4:39:41 PMPage 1

Government bond A government bond is issued by the government and it is a debt security. Government…

3. (a)What kind of cash flows do investors expect from their investment in gövernime (b)What role does bond indenture plays in a bond investment? (c)Assume that a company listed on the Sunrise Stock Exchange expects to pay dividends amounting to 100 shillings per share next year, shillings 200 in the year that follows and 250 shillings in the following year. After that, dividends are expected to grow at constant 5% per year. If the required rate of return is 10%, what price should investors pay for such shares today?

3. (a)What kind of cash flows do investors expect from their investment in gövernime (b)What role does bond indenture plays in a bond investment? (c)Assume that a company listed on the Sunrise Stock Exchange expects to pay dividends amounting to 100 shillings per share next year, shillings 200 in the year that follows and 250 shillings in the following year. After that, dividends are expected to grow at constant 5% per year. If the required rate of return is 10%, what price should investors pay for such shares today?

Corporate Fin Focused Approach

5th Edition

ISBN:9781285660516

Author:EHRHARDT

Publisher:EHRHARDT

Chapter9: The Cost Of Capital

Section: Chapter Questions

Problem 16P

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please help thanks A firm raises capital by selling $\$ 10,000 $ worth of debt with flotation costs equal to $3\% $ of its par value. If the debt matures in 5 years and has an annual coupon interest rate of $6\% $, what is the bond's YTM? The bond's YTM is \%. ( Round to two decimal places.)
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