Business

FinanceQ&A LibraryFrozen Food Bhd has issued a bond with par value of RM1,000, a coupon rate of 9 percent that is paid semi-annually, and that matures in 10 years. If an investor requires a 12 percent yield, calculate the value of the bond. Briefly describe the relationship between the interest rate and bond value. Iriz Bhd paid RM2.00 per share in common stock dividends last year. The company's policy is to allow its dividend to grow at 5 percent for 4 years and then the rate of growth changes to 3 percent per year from year five and on. Assume the required rate of return is 8 percent, calculate the value of the stock.Start your trial now! First week only $4.99!*arrow_forward*

Question

- Frozen Food Bhd has issued a bond with par value of RM1,000, a coupon rate of 9 percent that is paid semi-annually, and that matures in 10 years. If an investor requires a 12 percent yield, calculate the value of the bond. Briefly describe the relationship between the interest rate and bond value.
- Iriz Bhd paid RM2.00 per share in common stock dividends last year. The company's policy is to allow its dividend to grow at 5 percent for 4 years and then the rate of growth changes to 3 percent per year from year five and on. Assume the required rate of return is 8 percent, calculate the value of the stock.

Tagged in

Business

Finance

Find answers to questions asked by students like you.

Q: Given the following cash inflow at the end of each year what is the future value of this cash flow a...

A: Calculation of future values: Answer: Future value at 6% is $235,916.61 Future value at 9% is $248,2...

Q: How can we determine the amount of a periodic payment,?

A: Period payment is the regular payment made by an investor at fixed interval over the period of time....

Q: Describe the Cost flows and their classifications in a manufacturing company?

A: Cash flows are the cash generated from the operation of the business organisation. In other words, t...

Q: David Kapamagian borrowed money from a bank to finance a small fishingboat. The bank's loan terms al...

A: Working of the rate charged by the company is shown as follows:

Q: A five-year 2.4% defaultable coupon bond is selling to yield 3% (Annual Percent Rate and semi-annual...

A: Click to see the answer

Q: Describe the process of Evaluating a Single Project?

A: A single project can be evaluated using quantitative, qualitative or a combination of both. Project ...

Q: You are supposed to receive OMR3,000 four years from now. At an interest rate of 8%, what is that OM...

A: The calculation is: Values in OMR.

Q: Calculate the price of a zero coupon bond that matures in 20 years if the market interest rate is 8....

A: Formulas: Current price = Face value / (1+rate)^years

Q: Find the APR ,rounded to the nearest tenth of a percent ( one decimal Place ) for the loan. Purcha...

A: Usually any loan from banks (or) financial institutions will be using simple interest for calculatin...

Q: Describe the Methods for Finding Rate of Return?

A: Capital budgeting is the process a company follows to decide whether to purchase a fixed asset or no...

Q: If current assets = OMR125, net fixed assets = OMR300, long- %3D %3D term debt = OMR80, and owners' ...

A: Current liabilities are the short-term liabilities that are required by the company to pay-off withi...

Q: XYZ, Inc. has preferred stock outstanding. This stock has a par value of $100 and a 5% dividend. W...

A: Calculation of value of preferred stock: Answer: Value of preferred stock is $71

Q: A company has debt, preferred stock, and common stock outstanding. Rank these securities in terms o...

A: Answer: The correct answer is option (a). Debt < Preferred stock < Common stock

Q: Calculate the trade discount amount of goods with a list price of $29,000 less trade discounts of 40...

A: We will calculate the discount for each discount given in the problem. 1) first discount with discou...

Q: A company is considering two alternative investment projects both of which have a positive net prese...

A: Answer: The potential reasons for conflict between NPV and IRR ranking are as follows, Net present v...

Q: How can we measure the true rate of return of any internal portion of an investment project?

A: True rate of return means real rate of return on investment. It is the actual return earned on an in...

Q: Asetsenapa Ltd. presents the following information which relates to a week's work of three of its em...

A: Bonus is paid at 1/2 rate of the time saved Overtime is paid if the employee works more than 40 hour...

Q: Read the following selected quotes from senior executives and explain the role of capital investment...

A: Capital investment refers to the long-term investment which requires large amount of capital to inve...

Q: XYZ, Inc. recently paid a dividend of $1.00 per share which is expected to grow at a constant annual...

A: Calculation of dividend yield: Answer: Dividend yield is 5.2%

Q: Bates, Inc. pays a dividend of $1.00 and is currently selling for $32.50. If investors require a 12%...

A: Calculation of growth rate: Answer: Growth rate is 8.66%

Q: The Expanding Capital Corporation has a current capital structure of $15 million in secured bonds pa...

A: Part (1): Calculation of WACC before the new bond issue: Answer: WACC before the new bond issue is 1...

Q: How does the cost system affect the financial position of the firm?

A: Cost system is the system which is designed to evaluate the monitor the cost incurred by the company...

Q: Conrad Corporation plans to raise $8 million to pay off its existing short-term bank loan of $2.4 mi...

A: Debt Ratio is the ratio of total debt to total assets. in the balance sheet. Let us look at balance...

Q: Describe Tax Depreciation Methods?

A: Depreciation is a non-cash expense for the company. The depreciation expenses is charged because the...

Q: An electrical appliance company purchased an industrial robot costing $320,000 in year 0. The indust...

A: The question involves the calculation of gains/losses from disposal of an asset before its life gets...

Q: Using the information below, fill in the gaps in the financial statement date for the Stapler Corpor...

A: Answer: Calculation of net sales:

Q: The Stevia Corporation has $5 billion in assets, and its tax rate 40%. The company’s basic earning ...

A: The question is based on the concept of time-interest-earned (TIE) ratio, which is calculated as ear...

Q: Explain rebalance

A: Rebalancing is the strategy for realigning portfolio weightings. Rebalancing incorporates buying or ...

Q: CBR Corporation issued zero coupon bonds at their par value of RM100 one year ago. Today, the market...

A: Current price of bond is today’s market price of the bond it is calculated by considering present va...

Q: what are treasury notes?

A: Treasury notes: Treasury notes are interest-bearing securities with a static maturity of not fewer t...

Q: What are the financing borrowing activities?

A: The statement of cash flows is the statement which shows the change in the cash and cash equivalents...

Q: Define the term return on invested capital (RIC)?

A: All investments are made keeping focus on the expected returns that can be generated from it. The re...

Q: Net present value: Johnson Entertainment Systems is setting up to manufacture a new line of video ga...

A: Formulas:

Q: George and Barbara want to buy a house, they have combined incomes of $150,000 annually. Property t...

A: Calculation of maximum mortgage payment: Answer: Maximum mortgage payment is $36,600 Given informati...

Q: What is the process of economically evaluating a project's desirability?

A: Project desirability is the desirability that differentiates the project from other ordinary project...

Q: A small manufacturing company has an estimated annual taxable income of $195,000. Due to an increase...

A: Concept: The incremental tax is defined as the tax percentage in which the person will pay based on ...

Q: Oman Insurance Corporation, the insurer, reported net income of $ 333.3 million for 2015. It also re...

A: Computation:

Q: Explain and show through the balance sheet structure changes how the following transactions affect t...

A: Creation of credit is an important function for every bank in order to earn profit by increasing the...

Q: Owners of preferred stock are not guaranteed any dividend payments and have the lowest-priority clai...

A: Preferred stock means holder of the stock will have some preference when compared to the holder of e...

Q: What is multistage valuation model?

A: The multi-stage dividend discount model is an equity valuation model that expands on the Gordon grow...

Q: Describe the Incremental Analysis for Comparing MutuallyExclusive Alternatives?

A: Companies always come across various projects such that it needs to select only one project. So, whe...

Q: You wish to have $20,000 in an account 8 years from now. How much moneymust be deposited in the acco...

A: Computation:

Q: Linda wanted to invest in a bond issued by JoJo Ltd. The bond has $1,000 par value, matures in ten (...

A: Bonds: Bonds are a debt instrument on which interest is paid. They can be issued at a discount/par o...

Q: What is the Impact of Engineering Projects on Financial Statements?

A: Engineering projects are those projects that include a more human activity including designing, inno...

Q: NPV and Reducing Float No More Books Corporation has an agreement with Floyd Bank, whereby the bank ...

A: Calculate the net present value as follows: Net present value = Collections - (Compensating balance ...

Q: Clark Farms Inc. has the following data, and it follows the residual dividend model. Currently, it f...

A: Computations as follows:

Q: A friend of yours owns a company that is about to get a large government contract. He tells you thi...

A: The theory indicates that share prices reflect all the related information available.Strong-form EMH...

Q: Mathematically, how can we determine the rate of return for a project's cash flow?

A: IRRIt is the capital budgeting technique of discounted cash flow which gives a rate of return being ...

Q: Express the term Effective interest rate per payment period, quarterly payments with weekly compound...

A: The term Effective interest rate per payment period is the interest rate that is computed for compo...

Q: Define Liquidity Analysis?

A: Liquidity analysis is very essential as it shows the ability of the firm in paying short-term bills....