Blooming Ltd. currently has the following capital structure: Debt:$2,500,000 par value of outstanding bond that pays annually 12% coupon rate with an annual before-tax yield to maturity of 10%. The bond issue has face value of $1,000 and will mature in 25 years.Ordinary shares:65,000 outstanding ordinary shares. Thefirm plans to pay a $7.50 dividend per share in the next financial year. The firm is maintaining 3% annual growth rate in dividend, which is expected to continue indefinitely.Preferredshares: 40000 outstanding preferred shares with face value of $100,paying fixed dividend rate of 14%.Company tax rate is 30%. Required: Complete the following tasks: a)Calculate the current price of the corporate bond?
Blooming Ltd. currently has the following capital structure: Debt:$2,500,000 par
a)Calculate the current price of the corporate bond?
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