Duo Partner's invested on two securities;bonds and common shares. The bonds have coupon payment of 11 percent
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Duo Partner's invested on two securities;bonds and common shares. The bonds have coupon payment of 11 percent paid semi-annually, with a maturity of 10 years, and RM1,000 par value was issued. The company had announced will pay a dividend of RM3.20 for the share and expected to grow at 21 percent for 4 years and 5 percent indefinitely. Shareholders require 12 percent rate of return while bondholders require 10 percent rate of return. The market price for bonds RM1,500 and share is RM67.20. Calculate the intrinsic value forboth securities and justify whether worthto sell or not. (15 marks) (30 minutes)
Related Book For
Horngrens Financial And Managerial Accounting The Financial Chapters
ISBN: 9780134486840
6th Edition
Authors: Tracie L. Miller Nobles, Brenda L. Mattison, Ella Mae Matsumura
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