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A company has borrowed K800,000 from a bank. The loan is to be repaid by level instalments, payable annually in arrears for 10 years from the date the loan is made. The annual repayments are based on an effective rate of interest of 8% per annum. I. Calculate the amount of the level annual payment which will be paid over the 10-year term.
Background: please start by building an n=10-period binomial model for the short-rate, ri,j. The lattice parameters are: r0,0 = 5% u=1.1, d=0.9 and q = 1- q = 1/2.
Compute the price of an American call option on the same ZCB of the previous three questions. The option has expiration t = 6
t=6 and strike = 80.
Background: please start by building an n=10-period binomial model for the short-rate, ri,j. The lattice parameters are: r0,0 = 5% u=1.1, d=0.9 and q = 1- q = 1/2.
Compute the initial price of a futures contract on the same ZCB of the previous two questions. The futures contract has an expiration of t = 4
Background: please start by building an n=10-period binomial model for the short-rate, ri,j. The lattice parameters are: r0,0 = 5% u=1.1, d=0.9 and q = 1- q = 1/2.
Compute the price of a forward contract on the same ZCB of the previous question where the forward contract matures at time t=4.
Background: please start by building an n=10-period binomial model for the short-rate, ri,j. The lattice parameters are: r0,0 = 5% u=1.1, d=0.9 and q = 1- q = 1/2.
Compute the price of a forward contract on the same ZCB of the previous question where the forward contract matures at time t=4.
Background: please start by building an n=10-period binomial model for the short-rate, ri,j. The lattice parameters are: r0,0 = 5% u=1.1, d=0.9 and q = 1- q = 1/2.
Compute the price of a forward contract on the same ZCB of the previous question where the forward contract matures at time t=4.
Background: please start by building an n=10-period binomial model for the short-rate, ri,j. The lattice parameters are: r0,0 = 5% u=1.1, d=0.9 and q = 1- q = 1/2.
Compute the price of a zero-coupon bond (ZCB) that matures at time t = 10
t=10 and that has a face value of 100.
Submission Guideline: Give your answer rounded to 2 decimal places. For example, if you compute the answer to be 73.2367%, submit 73.24.
q1
ABC has the following capital structure. What is the WACC for the company?
Debt:
Bond 1. 400,000 bonds with a coupon rate of 6% (paid semi-annually), a price quote of 110.0 and have 20 years to maturity.
Bond 2. 300,000 zero coupon bonds (semi-annual compounding) with a price quote of 40.0 and 25 years until maturity.
Preferred stock:
600,000 shares of 4 percent preferred stock with a current price of $60, and a par value of $100.
Common stock:
12,000,000 shares of common stock, with a price of $80, and a beta of 1.3.
Market:
The corporate tax rate is 40 percent, the market risk premium is 9%, and the risk-free rate is 4%.
Question 2
The ABC stock has a beta of 1.4. The company just paid a dividend of $2.0, and the dividend is expected to grow at 6% per year, indefinitely. The expected market return is 14%, and the risk-free is 4%. The most recent stock price for ABC is $60. Calculate the cost of equity using the SML method.
Discuss the various challenges facing public sector accountants in Kenya today.
Discuss the forms of external financing that dominate your country in the area of financing the development of innovative startups
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