Question: QUESTION 4 2. (a) Five years ago Gasoo Ltd issued 12% irredeemable debenture at their par value of GH 100. The current market price of

QUESTION 4 2. (a) Five years ago Gasoo Ltd issued 12% irredeemable debenture at their par value of GH 100. The current market price of these bonds is GH94. The company pays corporation tax at a rate of 30%. Calculate the company's current cost of debenture. 3marks (b) The Treasury bill rate is 24% p.a. and the expected rate of returns on the equity of your firm is 3% p.a. If the expected return on the market portfolio is 30%, what is the beta of your company? 3marks The government of Ghana is about to issue an irredeemable bond with a face value of GH1,000 per bond and coupon interest rate of 15% pa. If the cost of the bond is 18% p.a.; (1) What will be the market price of this bond? 3marks (ii) If the bond was issued by a company located on the moon, will you pay the same price as in (i) above? Explain. [Total marks 10) Imark

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock blur-text-image

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!

KEW Enterprises began operations in January 20X1 to manufacture a hand sanitizer that promised to be more effective and gentler on the skin than existing products. Family members, one of whom was...

Question 3 Write short notes on the following; i. Weighted average cost of capital ii. Risk-return trade off iii. Efficient market hypothesis iv. Shareholder's wealth maximization Venture capital V....

. How many years will it take to pay off a GH11,000 loan with a GH1,241.08 annual payment and a 5% interest rate? A. 6 years B. 12 years C. 24 years D. 48 year Question 2. You are given the following...

Question 3 Write short notes on the following: i. Weighted average cost of capital ii. Risk-return trade off iii. Efficient market hypothesis iv. V. Shareholder's wealth maximization Venture capital...

5 years ago, KPM Ltd. issued 12% irredeemable debentures at `105, a `5 premium to their par value of `100. The current market price of these debentures is `95. If the company pays corporate tax at a...

Question 7 (1.5 points) Solvay Corporation's bonds have a 15-year maturity, a 12% semiannual coupon, and a par value of $1.000. The current market rate is 9%, based on semiannual compounding. What is...

Practice Questions for Valuation of Bonds and Shares RBS bank?s share is being traded at Rs. 510.25 per share. The company currently pays a dividend of Rs. 25. Assume that the expected growth in...

Needed help in Part B Case Study, question 1&2. Regards ASSIGNMENT QUESTIONS Answer ALL questions Due date: Value: Monday 4 April, 2016 15% Rationale This assignment covers Weeks 1 - 10, and builds...

Need HELP FOR ALL THE QUESTIONS question all in the file ASSIGNMENT QUESTIONS Answer ALL questions Due date: Value: Monday 4 April, 2016 15% Rationale This assignment covers Weeks 1 - 10, and builds...

Can you please solve question 7 and 8? Cost of capital 1. Five years ago. Ponsonic Ltd issued a 20-year, 12% coupon bond. The bonds are currently being traded for $1.153.72 per unit. Interest is paid...

QUESTION 3 (25 Marks) a. Gemerlang has in issue 500 000 RM1.00 ordinary shares whose current ex-dividend market price is RM1.50 per share. The company has just paid a dividend of RM0.27 per share and...

The Ministry of Health in the Canadian province of Ontario wants to know whether the national health care system is achieving its goals in the province. The ministry conducted the Ontario Health...

Consider the electric potential a distance x above the center of a ring of charge Q with a radius R surrounded by another ring of charge with a radius 2R as in the figure. (a) (6 points) What is the...

Which of the following accounts represents the accumulated costs of incomplete jobs? 1 3 Multiple Choice 2 points 0 1 . 1 3 : 3 7 Raw Materials InventoryCost of Goods SoldFinished Goods InventoryWork...

The Cost of Living in Selected U.S. Cities City New York (Manhattan) San Francisco, CA Washington, DC Los Angeles, CA Boston, MA Philadelphia, PA Seattle, WA Chicago, IL Richmond, VA Phoenix, AZ...