19) Ye are given the following information regarding UFSK limited, a listed entity. UO yM Numuer of outstanding shares 100 000 Earnings 300 000 Retention ratio 60% 91-day Treasury bill ate 6% Market risk premium 8% UFSK Beta 1.2 Dividend growth rate stable phase 5% Bonds outstanding 5 000 L Par value per bond 1000 Semi-annual coupon rate on bonds 6% Bond yield to maturity 8% Bond years remaining to maturity Corporate tax rate 30% Additional information UFSK limited recently paid a dividend • UFSK recently signed a deal and expects a super normal growth in earnings. The company expects earnings to grow by 8% for the first two years then decline by 2% in the following year, there after a stable growth of 5% is expected into the future. Required: a) As an investment analyst advise your client how much must she expect to pay for UFSK limited stock. b) Ascertain the market value of UFSK limited equity. c) Determine the fair value of UFSK limited bond d) Determine the total value of the company's debt e) Determine the total value of UFSK limited a0 Cin Rueinae Cnlytions, an industrial business concern, is financed by equity, debt Full text: 19450 ɔck. The company has 50 million outstanding shares with a par value of R1 each. The shares are listed on the stock exchange and recently paid a

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
icon
Related questions
Question
19) Ye are given the following information regarding UFSK limited, a listed entity.
UO yM
Numuer of outstanding shares
100 000
Earnings
300 000
Retention ratio
60%
91-day Treasury bill ate
6%
Market risk premium
8%
UFSK Beta
1.2
Dividend growth rate stable phase
5%
Bonds outstanding
5 000
L
Par value per bond
1000
Semi-annual coupon rate on bonds
6%
Bond yield to maturity
8%
Bond years remaining to maturity
Corporate tax rate
30%
Additional information
UFSK limited recently paid a dividend
• UFSK recently signed a deal and expects a super normal growth in earnings. The
company expects earnings to grow by 8% for the first two years then decline by 2% in
the following year, there after a stable growth of 5% is expected into the future.
Required:
a) As an investment analyst advise your client how much must she expect to pay for
UFSK limited stock.
b) Ascertain the market value of UFSK limited equity.
c) Determine the fair value of UFSK limited bond
d) Determine the total value of the company's debt
e) Determine the total value of UFSK limited
a0 Cin Rueinae Cnlytions, an industrial business concern, is financed by equity, debt
Full text: 19450 ɔck. The company has 50 million outstanding shares with a par
value of R1 each. The shares are listed on the stock exchange and recently paid a
Transcribed Image Text:19) Ye are given the following information regarding UFSK limited, a listed entity. UO yM Numuer of outstanding shares 100 000 Earnings 300 000 Retention ratio 60% 91-day Treasury bill ate 6% Market risk premium 8% UFSK Beta 1.2 Dividend growth rate stable phase 5% Bonds outstanding 5 000 L Par value per bond 1000 Semi-annual coupon rate on bonds 6% Bond yield to maturity 8% Bond years remaining to maturity Corporate tax rate 30% Additional information UFSK limited recently paid a dividend • UFSK recently signed a deal and expects a super normal growth in earnings. The company expects earnings to grow by 8% for the first two years then decline by 2% in the following year, there after a stable growth of 5% is expected into the future. Required: a) As an investment analyst advise your client how much must she expect to pay for UFSK limited stock. b) Ascertain the market value of UFSK limited equity. c) Determine the fair value of UFSK limited bond d) Determine the total value of the company's debt e) Determine the total value of UFSK limited a0 Cin Rueinae Cnlytions, an industrial business concern, is financed by equity, debt Full text: 19450 ɔck. The company has 50 million outstanding shares with a par value of R1 each. The shares are listed on the stock exchange and recently paid a
Expert Solution
steps

Step by step

Solved in 4 steps with 6 images

Blurred answer
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
Essentials Of Investments
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
FUNDAMENTALS OF CORPORATE FINANCE
FUNDAMENTALS OF CORPORATE FINANCE
Finance
ISBN:
9781260013962
Author:
BREALEY
Publisher:
RENT MCG
Financial Management: Theory & Practice
Financial Management: Theory & Practice
Finance
ISBN:
9781337909730
Author:
Brigham
Publisher:
Cengage
Foundations Of Finance
Foundations Of Finance
Finance
ISBN:
9780134897264
Author:
KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:
Pearson,
Fundamentals of Financial Management (MindTap Cou…
Fundamentals of Financial Management (MindTap Cou…
Finance
ISBN:
9781337395250
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Finance
ISBN:
9780077861759
Author:
Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:
McGraw-Hill Education