Currently, the number of outstanding shares issued by Ponggol Limited (“Ponggol”) is 25,000,000 and it trades at $2.50 per share. Ponggol operates several high-tech indoor vegetable farms in Singapore. Three years ago, Ponggol issued 80,000 bonds (which currently trades at $1,080) based on the following terms:• Coupon = 6% (paid semi-annually)• Maturity = 10 years• Par value = $1,000 The debt/equity ratio of the high-tech agriculture industry is 0.5. By applying Modigliani and Miller theory, hypothesize what Ponggol should do to maximize the value of the firm. State your assumptions. No computations are required.
Currently, the number of outstanding shares issued by Ponggol Limited (“Ponggol”) is 25,000,000 and it trades at $2.50 per share. Ponggol operates several high-tech indoor vegetable farms in Singapore. Three years ago, Ponggol issued 80,000 bonds (which currently trades at $1,080) based on the following terms:• Coupon = 6% (paid semi-annually)• Maturity = 10 years• Par value = $1,000 The debt/equity ratio of the high-tech agriculture industry is 0.5. By applying Modigliani and Miller theory, hypothesize what Ponggol should do to maximize the value of the firm. State your assumptions. No computations are required.
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
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Currently, the number of outstanding shares issued by Ponggol Limited (“Ponggol”) is 25,000,000 and it trades at $2.50 per share. Ponggol operates several high-tech indoor vegetable farms in Singapore. Three years ago, Ponggol issued 80,000 bonds (which currently trades at $1,080) based on the following terms:
• Coupon = 6% (paid semi-annually)
• Maturity = 10 years
• Par value = $1,000
The debt/equity ratio of the high-tech agriculture industry is 0.5.
By applying Modigliani and Miller theory, hypothesize what Ponggol should do to maximize the value of the firm. State your assumptions. No computations are required.
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