SunTech Bhd is a company that owns several technology stores in Malaysia. They are considering
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Question:
SunTech Bhd is a company that owns several technology stores in Malaysia. They
are considering opening a new store in Penang taking advantage of the proximity
to a university campus. This project is financed with a zerocoupon bond with
market value today of RM million. The bond matures in one year. The
project will generate a cash flow in two years of either RM million with
probability of or RM million with probability of The yield to maturity
of the bond is annually. Assume investors are risk neutral.
Calculate;
i The face value of debt.
ii Annual return demanded by investors
Explain;
iii The difference between yield to maturity and cost of debt Rd
Related Book For
Modern Advanced Accounting In Canada
ISBN: 9781259066481
7th Edition
Authors: Hilton Murray, Herauf Darrell
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