10:35 DE 58% Q4. (a) A 15-year. $1,000-face-value bond was issued with 8 percent coupon rate. As of today, the bond has a current market price of $935 and 10 years remain until maturity. i. What is the implied market-determined annual discount rate (i.e. annual yield to maturity) on this bond? Some bonds sell at a premium over par value while others sell at a discount Elaborate. (7.5+ 7.5=15) (b) A large mining company, Gold Miners Ltd. has a popular CEO. He is always in the media and keeps coming up with big announcements about investing in one country or the other. The CEO and his team have given themselves huge bonuses in last two years even though several new initiatives underperformed or failed to take off. Share price of the company has been stagnant and the dividend payout along with return on equity are declining. Top leadership does not share much information about large new investments with the media or shareholders in the name of trade/business secrecy. i.Identity and briefly discuss the above issue which is often faced by large companies? ii. Assume yourself to be a strategy consultant. What suggestions will you offer to resolve the problem? (5+5=10) too 10:36 4.58% Q6. Mr. Shahrukh Khan is planning to buy a new Machine A for 100,000. The machine has an economic life of 4 years with the following depreciation schedule. Year 2 3 4 Factor 0.33 0.45 0.15 0.07 Mr. Shahrukh Khan is also selling a fully depreciated old Machine B with book value as zero. It's pre-tax salvage value is 310,000. Being an astute businessman, he replaces the machine every three year. The machine can be sold at a salvage value of 28,000 at the end of the 314 year. As the machine is very efficient, its purchase would require an increase in inventory of 29,000. The machine will generate revenue of 80,000 and needs an operating cost of R20,000 each year. Mr. Shahrukh Khan being a successful businessman fall under the tax rate of 40% and the expected rate of return for him is 20%. You need to calculate the following: i. Initial Cash flow in T, ii. The terminal cash flow at the end of third year iii. The NPV of the project iv. Also, you need to only comment on the IRR of the project based on the NPV if it is greater/less than the discount rate and why? (5+5+7.5+2.5=20)