Sizo Business Solutions, an industrial business concern, is financed by equity, debt and preference stock. The company has 50 million outstanding shares with a par value of R1 each. The shares are listed on the stock exchange and recently paid a dividend of 220 cents. The dividend has been growing at a steady rate of 5 percent over the years, and market analysts believe this growth rate is sustainable and will therefore continue for the foreseeable future. The company’s beta is 1. Sizo also has 100 000 bonds in issue. The debt is listed on the exchange, and currently trades at a yield-to-maturity of 8 percent. The debt has a par value of R1 000 each and pays a coupon of 10 percent per annum paid semi-annually. The debt has four years remaining to maturity. What is the value of Sizo Business total debt?
Sizo Business Solutions, an industrial business concern, is financed by equity, debt and preference stock. The company has 50 million outstanding shares with a par value of R1 each. The shares are listed on the stock exchange and recently paid a dividend of 220 cents. The dividend has been growing at a steady rate of 5 percent over the years, and market analysts believe this growth rate is sustainable and will therefore continue for the foreseeable future. The company’s beta is 1. Sizo also has 100 000 bonds in issue. The debt is listed on the exchange, and currently trades at a yield-to-maturity of 8 percent. The debt has a par value of R1 000 each and pays a coupon of 10 percent per annum paid semi-annually. The debt has four years remaining to maturity. What is the value of Sizo Business total debt?
Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter18: Initial Public Offerings, Investment Banking, And Capital Formation
Section: Chapter Questions
Problem 9MC
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- Sizo Business Solutions, an industrial business concern, is financed by equity, debt and
preference stock. The company has 50 million outstanding shares with a par value of R1 each. The shares are listed on the stock exchange and recently paid a dividend of 220 cents. The dividend has been growing at a steady rate of 5 percent over the years, and market analysts believe this growth rate is sustainable and will therefore continue for the foreseeable future. The company’s beta is 1. Sizo also has 100 000 bonds in issue. The debt is listed on the exchange, and currently trades at a yield-to-maturity of 8 percent. The debt has a par value of R1 000 each and pays a coupon of 10 percent per annum paid semi-annually. The debt has four years remaining to maturity.
What is the value of Sizo Business total debt?
How do you work out the debt
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