MANAGERIAL FINANCE (FIN 745) FINAL ASSESSMENT Name Student ID Program Master in Busines Administrative Group MM7002BF ANSWER ALL QUESTIONS QUESTION 1 KLH Sdn Berhad is expected to pay a RM2 dividend in one year and he expects dividends to grow at 5 percent indefinitely. The required rate of return from this investment is 12 percent. What is the price of the stock? If a year later the market value is RM20 per share, what is the loss or profit made from this investment? Hijau Incorporation has an issue of RMI, 000 par value bonds with a 14 percent coupon interest rate outstanding The issue pays interest annually and has 10 years remaining to its maturity date. Bonds of similar risk are currently selling to yield a 12 percent rate of return. The bond is currently traded at RM1010.00 Green Blue Company has an outstanding preferred issue of stock with a par value of RM100 and an annual dividend of 10 percent (of par). Similar risk preferred stocks are yielding an 11.5 percent annual rate of return What is the profit or loss made via this investment if the market price of the preferred stock is RM 95.00 6 months later. (10 marks) QUESTION 2 Fitrah Corporation manufactures industrial type sewing machines. Fitrah Corp. received a very large order from a few Asian countries. In order to be able to supply these countries with its products, Fitrah will have to expand its facilities. Of the required expansion, Fitrah feels it can raise RM75 million internally, through retained camnings. The firm's optimum capital structure has been 45% debt, 10% preferred stock and 45% equity. The company will try to maintain this capital structure in financing this expansion plan Common Stock Cuently Fitrah's common stock is traded rior of RM20