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As all questions linked can i please get answers for all questions The value of a company is the sum of the value of equity
As all questions linked can i please get answers for all questions
The value of a company is the sum of the value of equity (ordinary shares & preference shares) and the value of debt. Use the information below to calculate the value of Narda Ple debt and equity. 1) Narda Ple currently has in issue 10-year corporate bonds with a total face value of 13million. Each bond has a face value of 100. The coupon payment on the bonds is 8% per annum and the bond is due to mature in 2022. This means that Narda Plc has 3 years of interest to pay on the bonds (2020, 2021 and 2022). In 2022, the company will have to repay the 13million to its debt investors. Given that the next best alternative investment for its debt holders is presently 5%, calculate the present value of Narda Plc debt. ii) Narda Plc has 2 million preference shares in issue. Each preference share pays an annual dividend of 5p and the investors require a return of 12% on alternative investments of similar risk. Calculate the current value of the preference shares. 111) Equity investors in Narda Plc, require a 12% return on alternative investments of identical risk. The expected free cash flows for the next three years are given in the table below. Year Free cash flow (in ) 2020 9,900,000 2021 11,650,000 2022 9,000,000 Calculate the free cash flow value of Narda Plc. iv) Using your results in i), ii), and iii), calculate the equity valuation of Narda Plc. v) Assuming there are 5 million ordinary shares in issue, calculate the current share price of Narda PlcStep by Step Solution
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