Question
Flex Berhads capital structures details: Bonds: The company issued a 25-year bond, 15 years ago, with a semiannual coupon of 8%. The current interest rate
Flex Berhads capital structures details: Bonds: The company issued a 25-year bond, 15 years ago, with a semiannual coupon of 8%. The current interest rate is 7.31%. Preferred stocks: The dividend rate is 8% on a par value of RM100, and the interest rate is 9.15%. Common stocks: The latest dividend paid was RM0.14 per share, growth rate is 5%, and the current interest rate is 9.14%. New Bonds: The company plans to issue new callable bonds with a floatation cost of 2%, an annual coupon of 8% for the term of 25 years. The bonds callable value is RM1,350 per unit, and will be sold today for RM875 per unit.Calculate the price of the bond today.
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