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a. Laksa Penang Berhad has bonds on the market making annual payments, with 13 years to maturity, and selling for RM1,045. At this price, the
a. Laksa Penang Berhad has bonds on the market making annual payments, with 13 years to maturity, and selling for RM1,045. At this price, the bond yield 7.5%. Compute the coupon rate be on this bond. (5 Marks) b. Laksa Johor Berhad issued 11 -year bonds a year ago at a coupon rate of 7%. The bond makes semi-annual payments. If the YTM on these bonds is 8%. Calculate the price if this bond today. (5 Marks) c. Asam Laksa Berhad just paid a dividend of RM1.25 per share on its common stock. The dividends are expected to grow at 28% for the next eight years and then level off to a 6% growth rate indefinitely. If the required rate of return is 13%, find out the price of the common stock as of today. (4 Marks) d. Asam Pedas Berhad, is a young start-up company. No dividends will be paid on the stock over the next nine years because the firm needs to low back its earnings to fuel growth. The company will pay a RM10 per share dividend in 10 years and will increase the dividend by 5% per year thereafter. If the required rate of return on this common stock is 14%, determine the current price of the common stock. (6 Marks)
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