MGF301 Assignment2

MGF301 Assignment2 - 4 Solve for Coupon Using trial and...

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Danny Yu - 35464520, Mizuho Takegawa - 36785939, Jonathan Pusar, Michael Migliore - 35173703 Assignment #2 1. Common Shares (par value) 2000000*0.001+300000 0*0.001 5000 Additional paid in capital 100000+8000000-5000 8095000 Retained Earnings 10500000-5000-8095000 2400000 Net common equity 10500000 2. (1) 1000*0.075=75 (2)=PV (0.075,13,75,1000) =\$1,063.58 (3) =PV (0.08,13,75,1000) =\$960,48 3. (a)=Yield(Date(2008,1,1), Date(2028, 1,1), 0.0575, 90, 100, 2 Answer. 6.66% (b)=Yield(Date(2008,1,1), Date(2028,1,1), 0.0575, 100, 100, 2 Answer. 5.75% (c)=Yield(Date(2008,1,1), Date(2028,1,1), 0.0575, 110, 100, 2 Answer. 4.96% I used this formula. =Price( settlement, Maturity, Rate, YTM, Redemption, Frequency)

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Unformatted text preview: 4. Solve for Coupon - Using trial and error and the PV function annual interest payment = 4.4975% PV(0.0625,17,0.04975*12 2,122) price = (\$100.00) 5a) Stock A: Dividend payout = \$0.70/\$2.00 = \$0.35 Stock B: Dividend payout = \$0.70/\$1.50 = \$0.47 b) Stock A: Growth = 15% * (1-0.35) = 0.0975 Stock B: Growth = 17% * (1-0.47) = 0.0901 c) Stock A: Estimated stock price = \$0.70/(.1-.0975) = \$0.70/.0025 = \$280.00 Stock B: Estimated stock price = \$0.70/(.1-.0901) = \$0.70/.0099 = \$70.71 d) I think that Stock A has a higher value of equity but not positive....
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