business will have net inflows of € 20 million, € 12 million, € 11 million, € 8 million, and € 5 million. for the next five years. Its current book value is € 30 million. The company has issued 10,000 bonds with an annual interest rate of 3%, with a nominal value of € 1,000 each and maturing in five years. If the market rate is 4%, what is the value of the business, bond and share capital?
business will have net inflows of € 20 million, € 12 million, € 11 million, € 8 million, and € 5 million. for the next five years. Its current book value is € 30 million. The company has issued 10,000 bonds with an annual interest rate of 3%, with a nominal value of € 1,000 each and maturing in five years. If the market rate is 4%, what is the value of the business, bond and share capital?
Chapter9: The Cost Of Capital
Section: Chapter Questions
Problem 16P
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A business will have net inflows of € 20 million, € 12 million, € 11 million, € 8 million, and € 5 million. for the next five years. Its current book value is € 30 million. The company has issued 10,000 bonds with an annual interest rate of 3%, with a nominal value of € 1,000 each and maturing in five years. If the market rate is 4%, what is the value of the business, bond and share capital?
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