Analyse the capital structure and dividends growth with the following information that is available: Current share market
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Question:
Analyse the capital structure and dividends growth with the following information that is available:
Current share market value is £5.
Current dividends are 35 pence each year
Constant growth rate of 6% each year
With a syndicated loan, which is a debt that has to be paid back by a certain date, the annual interest charge before taxes is £120,000 on a loan of £2,000,000.
Bonds are currently being traded on the market. There are 220,000 of them, each with a face value of £10 and a pre-tax payment of 10% each year to bond holders.
At the moment, the market value of these bonds is £9.
The tax rate for firms is currently 32%.
Related Book For
Financial Accounting an introduction to concepts, methods and uses
ISBN: 978-0324789003
13th Edition
Authors: Clyde P. Stickney, Roman L. Weil, Katherine Schipper, Jennifer Francis
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