Question: Please Help!! Much appreciated. 4. You are given with the following information statements of a public firm Bambie in the airline industry concurrently. (Notice that
Please Help!! Much appreciated.



4. You are given with the following information statements of a public firm Bambie in the airline industry concurrently. (Notice that all negative numbers are parenthesized). The firm has issued 12 million shares of common stock with current market price as $45/per share, the expected dividend is $4.90/per share with 3.5% growth rate, 300,000 shares of preferred stocks with promised preferred dividend and preferred stock price as $2.20/per share and $22.5/per share, respectively. The firm also has currently, 2 million 3.6%-coupon bonds with $1,000 face value that pays the coupons semi-annually. The current bond price is $735/per bond. The bonds are expected to mature in 2020. Answer the following questions: a) If using the market prices for assessment on rates of return, what is the rate of return the common stock of Bambie? What is the rate of return for their preferred stocks? b) What is the bond's yield to maturity of the firm's corporate bond? c) Suppose you are also given with the following financial statements of Bambie for the past three years. What are the historical returns on equity for this company for the past three years? Is the firm Bambie doing well from the perspectives of shareholders? Why or why not? d) Is this firm well-diversified with their arrangement of capital? That is, are they well diversified with different sources of capital? c) Based on the given information, provide your ratios analyses and interpret your results for the firm's performance. f) Provide the common size statements for both Balance Sheet and Income Statement. What kind of noticeable pattern you may identify for the firm? Is this usual for the airline industry? Balance Sheet (in millions) 2014 2015 2016 Assets Cash Marketable securities Accounts Receivable Inventory Plant, Building, and Equipment's (net) Investments in affiliates 30 100 920 710 872 0 10 100 150 178 1802 30 473 0 800 450 1209 329 Total Assets 2632 2270 3261 Liabilities Short-term debts Advances from customers Accounts payable Interest payable Tax payable Other Accrued Expenses Bonds payable Stockholders' Equity 107 111 85 75 127 20 925 9 34 192 98 147 30 134 771 62 128 35 750 15 486 Common stock Additional paid-in capital Retained earning Total liabilities and equities 1021 74 87 2632 1055 156 78 2270 1175 47 129 3261 Income Statement(in millions) 2014 2015 2016 Net Sales Cost of Goods Sold Selling and General Expenses Depreciation Expense Interest Expense Income Tax Expense Net Income 3296 2115 700 160 90 195 3418 1979 812 298 109 137 3983 2510 759 284 121 254 55 36 83
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