FIN1FOF- FUNDAMENTALS OF FINANCE - ASSIGNMENT Carlton Manufacturing Company Ltd Balance Sheet as at 31/12/19 ASSETS Notes Cash Accounts Receivable Inventory Property, plant & equipment 110 220 610 1,170 LIABILITIES Accounts payable Bank loan (interest only) Mortgage Loan Corporate bonds 1 2 3 150 200 540 350 Total Assets 2,110 1,240 Total liabilities SHAREHOLDERS' EQUITY Ordinary shares Preference Shares Retained earnings Total shareholders' equity Total liabilities and shareholders' equity 4 5 450 210 210 870 2,110 Notes 1. 2. The interest rate on the bank loan is 9.7% p.a. The interest rate on the mortgage loan is 6% p.a. The corporate bonds have a credit rating of B+ and have 2 years to maturity. They make quarterly coupon payments at a coupon rate of 4%p.a. 3. 4. The ordinary shares are shown on the balance sheet at their book value of $1 per share. They have a beta of 1.1. They have just paid a dividend of $0.05. The dividend is expected to grow at a rate of 7% p.a. for the next 4 years, and after that it will grow at a constant rate of 3% p.a. in perpetuity. 5. The preference shares have a par value of $1 each and are shown on the Balance Sheet at their par value. They pay a constant dividend of $0.11 and they are currently trading for $1.03. 6. The market risk premium is 7.8%. PART 1 - WEIGHTED AVERAGE COST OF CAPITAL de dade aux bleu Chain YOLOLE Whole decimal MIRALIT 12 decimal place place Bank Londres Dobre-cotobankan Market valuesbank loan Mortgage Loa Door-coat ortogon Market Corporate Bonde Creditspread Creditspreadas a percento (decimal placea) Rekreabeled to calculator corporate bond (decimal place) Debre-catcorporate bond po Pace value abond Coupons Number of years to matury Number of coupon payment per year Tointer couponpering Tou vale a coupon paypaid per year Vale bleach individual coupon Quarterly led decimal place) Vale corporated Ordinary Shares Piltrere to be used to calcul contrary share decir places Contoordinary may davaya hawa videonya havde Gala hapo hata dvd-alpaavaadame Time Maratanaccuisanahasaannnathapaharya cahaha Chldendte Dividendycarrow Dividend years now Dividend year Odendron Dividend years from now Price ordinary researce Number of ordinary share Toni market value of ordinary share Preference Shares Preverence dividend per share Prerende Couto presence share Number of peerence share Total market value of presence share Tax Rate MIRE Weighed Coat the Land Weighed Coat the Morton Weigh Court Corporate Bond Weighed out the Ordinary Care Weighed out the Presence har Weigned Average Couto Capital 1 yr 10 Rating AAA AA+ AA AA- A+ A - BBB+ BBB- BB+ BB- 123 131 139 147 155 163 171 179 187 195 203 211 219 227 235 243 251 259 267 275 283 2 yr 159 167 175 183 191 199 207 215 223 231 239 247 255 263 271 279 287 295 303 311 319 195 203 211 219 227 235 243 251 259 267 275 283 291 299 307 315 323 331 339 347 355 4 yr 231 239 247 255 263 271 279 287 295 303 311 319 327 335 343 351 359 367 375 383 391 5 yr 267 275 283 291 299 307 315 323 331 339 347 355 363 371 379 387 395 403 411 419 427 303 311 319 327 335 343 351 359 367 375 383 391 399 407 415 423 431 439 447 455 463 339 347 355 363 371 379 387 395 403 411 419 427 435 443 451 459 467 475 483 491 499 8 yr 375 383 391 399 407 415 423 431 439 447 455 463 471 479 487 495 503 511 519 527 535 9 yr 411 419 427 435 443 451 459 467 475 483 491 499 507 515 523 531 539 547 555 563 447 455 463 471 479 487 495 503 511 519 527 535 543 551 559 567 575 583 591 599 607 + B - CCC+ CCC- 571 FIN1FOF- FUNDAMENTALS OF FINANCE - ASSIGNMENT Carlton Manufacturing Company Ltd Balance Sheet as at 31/12/19 ASSETS Notes Cash Accounts Receivable Inventory Property, plant & equipment 110 220 610 1,170 LIABILITIES Accounts payable Bank loan (interest only) Mortgage Loan Corporate bonds 1 2 3 150 200 540 350 Total Assets 2,110 1,240 Total liabilities SHAREHOLDERS' EQUITY Ordinary shares Preference Shares Retained earnings Total shareholders' equity Total liabilities and shareholders' equity 4 5 450 210 210 870 2,110 Notes 1. 2. The interest rate on the bank loan is 9.7% p.a. The interest rate on the mortgage loan is 6% p.a. The corporate bonds have a credit rating of B+ and have 2 years to maturity. They make quarterly coupon payments at a coupon rate of 4%p.a. 3. 4. The ordinary shares are shown on the balance sheet at their book value of $1 per share. They have a beta of 1.1. They have just paid a dividend of $0.05. The dividend is expected to grow at a rate of 7% p.a. for the next 4 years, and after that it will grow at a constant rate of 3% p.a. in perpetuity. 5. The preference shares have a par value of $1 each and are shown on the Balance Sheet at their par value. They pay a constant dividend of $0.11 and they are currently trading for $1.03. 6. The market risk premium is 7.8%. PART 1 - WEIGHTED AVERAGE COST OF CAPITAL de dade aux bleu Chain YOLOLE Whole decimal MIRALIT 12 decimal place place Bank Londres Dobre-cotobankan Market valuesbank loan Mortgage Loa Door-coat ortogon Market Corporate Bonde Creditspread Creditspreadas a percento (decimal placea) Rekreabeled to calculator corporate bond (decimal place) Debre-catcorporate bond po Pace value abond Coupons Number of years to matury Number of coupon payment per year Tointer couponpering Tou vale a coupon paypaid per year Vale bleach individual coupon Quarterly led decimal place) Vale corporated Ordinary Shares Piltrere to be used to calcul contrary share decir places Contoordinary may davaya hawa videonya havde Gala hapo hata dvd-alpaavaadame Time Maratanaccuisanahasaannnathapaharya cahaha Chldendte Dividendycarrow Dividend years now Dividend year Odendron Dividend years from now Price ordinary researce Number of ordinary share Toni market value of ordinary share Preference Shares Preverence dividend per share Prerende Couto presence share Number of peerence share Total market value of presence share Tax Rate MIRE Weighed Coat the Land Weighed Coat the Morton Weigh Court Corporate Bond Weighed out the Ordinary Care Weighed out the Presence har Weigned Average Couto Capital 1 yr 10 Rating AAA AA+ AA AA- A+ A - BBB+ BBB- BB+ BB- 123 131 139 147 155 163 171 179 187 195 203 211 219 227 235 243 251 259 267 275 283 2 yr 159 167 175 183 191 199 207 215 223 231 239 247 255 263 271 279 287 295 303 311 319 195 203 211 219 227 235 243 251 259 267 275 283 291 299 307 315 323 331 339 347 355 4 yr 231 239 247 255 263 271 279 287 295 303 311 319 327 335 343 351 359 367 375 383 391 5 yr 267 275 283 291 299 307 315 323 331 339 347 355 363 371 379 387 395 403 411 419 427 303 311 319 327 335 343 351 359 367 375 383 391 399 407 415 423 431 439 447 455 463 339 347 355 363 371 379 387 395 403 411 419 427 435 443 451 459 467 475 483 491 499 8 yr 375 383 391 399 407 415 423 431 439 447 455 463 471 479 487 495 503 511 519 527 535 9 yr 411 419 427 435 443 451 459 467 475 483 491 499 507 515 523 531 539 547 555 563 447 455 463 471 479 487 495 503 511 519 527 535 543 551 559 567 575 583 591 599 607 + B - CCC+ CCC- 571