Question 5 20 Marks (a) Based on the pro-forma statements prepared in question 2 Insignia Corporation Limited will need external financing in 2021. As such the company is considering issuing a $100,000,000 15-year bond, with an annual coupon rate of 10%, and semi-annual interest payments. Required: i. If the company anticipates that the bond will close at a yield to maturity of 12%, given the company's credit ratings and current market conditions, how much would an investor be willing to pay for $1,000 face value of this bond? (8 Marks) ii. Compute the current yield of the bond at this price (from i). (2 Marks) (b) The company is also considering offering additional common shares in the market. However Insignia is concerned about whether its stock is fairly valued on the market. As such, its Finance Manager has undertaken an exercise to determine the current price of its common shares based on the following anticipated dividend payout structure: Insignia's last dividend paid was $4.20. The company intends to increase the dividend by 10%, 15% and 20% respectively over the next three (3) years. Thereafter, the company is expected to increase dividends by an annual rate of 2%. The company continues to assume a required return of 12%. Required: Given the above, what should be the current price of Insignia's common shares? (10 Marks)