1) XYZ Company is decided to issue 1,000 $ par value bonds with an 12 % coupon paid semi-annually with a 5 year maturity. At the market, same type of bonds with same maturity and same risk level is trading at 1,100 $. Explain how to calculate yield to maturity and current yield. What is the difference between yield to maturity and current yield? 2) A financial analyst at XYZ wants to compute the company's value using FCF method. The company's current FCF is 10,000,000$ with the following information: Cost of new debt Tax rate Target D/E ratio 8% 40 % 0.8033 30 $ 1.50 $ Estimated growth rate 7% Stock price Next year's dividend What is the value of the company? |