Bina Bina Berhad is a construction company located in Petaling Jaya and is listed on Bursa

Malaysia. The entire revenue for the current fiscal year for the company was RM$12\mathrm{.}5$ million.

The FTSE Bursa Malaysia $KLCl$ returns are $9\%,$ while the predicted risk$-$free interest rate in

the current environment is $2\mathrm{.}0\%.$ Bina Bina Berhad anticipates that their business will keep

growing in the future. The company's beta value, indicating its strong rate of growth, is $1\mathrm{.}25.$

The company's capital structure consists of $40\%$ long$-$term debt. There will be $10\%$ preferred

stock and $50\%$ common stock The description of capital structure for Bina Bina Berhad is as

following:

Common stock

Cash dividend payments and$/$or price fluctuations are the sources of common stock

returns. While investors who get dividends are generally expecting them to increase over

time, certain stocks do not pay dividends, especially in their early growth years. As a

company grows, it usually starts to pay dividends, and management is very reluctant to

cut the payout. Since companies that do not pay dividends are typically thought to keep

earnings in order to foster growth, the stock price should increase more quickly than that

of companies with large payout ratios. The payout percentage for Bina Bina Berhad is

$45\%.$

There are presently $4$ million shares of RM$2\mathrm{.}50$ par value outstanding of Bina Bina

Berhad's common stock Common stock presently trades for RM$25$ per share. The

dividend growth rate of the corporation is anticipated to be $25\%$ in the next year, followed

by $20\%$ in the second year and $10\%$ in the third. It is anticipated that the dividend will

increase every year after that at a steady pace of $7\%.$ It is anticipated that the payout

ratio of the corporation would remain unchanged. Pre$-$emptive rights are not granted to

the common shares.

Investors in Bina Bina Berhad have the opportunity to purchase additional shares of

common stock with cash purchases or through automatic dividend reinvestment. Under

this scheme, investors can buy back more shares at market value and reinvest their

dividends in common stock. Participants in this plan are restricted to purchasing a

maximum of RM$1,000$ worth of extra shares each month.

Preferred Stock:

In April $2023,$ Sintok Alam Holding Company merged to become a Bina Bina Berhad

subsidiary, resulting in the issuance of almost $2\mathrm{.}4$ million shares. The preferred stock is

now trading at RM$20,$ with a dividend of RM$1\mathrm{.}25.$ There are no voting rights for the

preferred stock.

Bond:

An $7\%$ coupon rate bond due in $15$ years is one of the two largest long$-$term debt issues.

This bond is currently on the market for RM$1050.$ The other large publicly traded bond is

a $12-$year $8\mathrm{.}5\%$ coupon bond with semi$-$annual interest payment. This bond is being sold

for RM$900.$ Rating Agency Malaysia $($RAM$)$ Berhad has assigned an A rating to both of

these bonds. The bonds have par value of RM$1,000.$ QUESTIONS:

$($Answer ALL questions$)$

In the event that the bond's maturity period was extended from $12$ to $18$ years, what

would the $8\mathrm{.}5\%$ coupon bond be worth? Describe how the bond's value is affected by the

amount of time till maturity. $($Hint: Find required rate of return$).$help