Question: Kindly help me answer this questons 1. RPL Ltd is issuing corporate bonds to finance its expansion into new markets at the beginning of its
Kindly help me answer this questons
1. RPL Ltd is issuing corporate bonds to finance its expansion into new markets at the beginning of its current financial year which is 1 july 2020. the financial and tax year end is 30 June. the face value of each bond is $100 but the company will issue each bond at $ 106. the company will issue 1 million bonds. the coupon bond rate is 9% and the tax rate is 28%. the term to maturity of the bonds will be 5 years and interest is payable annually. what of the following is more likely to reflect the yield to maturity of the bonds 9 before tax)?
A) 8.51636% B) 7.51637% C )9.43980% D) 7.85577%
2.LKJ Ltd issued one million preference shares 6 years ago at an issue price which was equals to the $100 face value of each preference shares. the coupon divided rate was 9%. the tax rate is 28%. preference shares are currently trading at $9670 ( cum- divided). the term to maturity is 4 years. the next preference divided is payable in the next 2 days ( which you can assume is payable today from a valuation perspective ). the investor today will receive this preference divided. the company is considering issuing preference shares in order to comply with its target capital structure. what is the yield/cost of preference shares that the company will include in its WACC?
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