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Company has some investment opportunities. For this they are considering raising extra capital with following structure: 20% comes from prefferd shares 30% comes form common
| Company has some investment opportunities. For this they are considering raising extra capital with following structure: | ||||||
| 20% comes from prefferd shares | ||||||
| 30% comes form common shares | ||||||
| 50% comes from bonds | ||||||
| Preferred shares have 6% dividends of 100 euro par. Current market price is 120 euros. | ||||||
| Common shares are trading at 15,90. Last paid dividend was 1,20 per share. Company uses 45% of the profits for reteined earnings. ROE is 13,4% | ||||||
| Euro area stock market has returned approximately 12,8% last year. Bu-Bill rate is 0,48%. | ||||||
| Company's stock and equity market have correlation coefficient of 0,6. Stock had risk of 28% last year while the market risk was 24% | ||||||
| Bonds carry 4% coupon, payable semi-annually. Bond is trading currently at 976,01 and has 7 years to maturity. | ||||||
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