i need answer for 5 question
Intercontinental Inc. is an outdoor furniture company that is planning to considerably grow over the coming years. Gaining very good reputation with its high-quality products, the company is projecting that it can grow at 10% over the coming 4 years and then the growth rate will decrease to 3% thereafter. Its earning per share (EPS) this year was $4 and the company's dividend pay-out ratio was 30%, that is its most recent dividends was $1.2. In order to finance this growth, the company needs to invest in new machinery and working capital. The company is considering three financing options to finance this growth: Either to raise equity, get an amortising loan from its bank or issue a bond. if the company chooses to raise equity, what would be the expected price/share given the projected growth rates and given that the expected return on the company's equity is 15% (assume the company uses the divided discount model). [Remove dollar sign and keep two decimal places in your final answer) 03 5. What would be the total interest payments after 5 payments? (show the amortization table in your workout submitted on moodle in order not to lose marks). [Remove $ sign & commas and keep two decimal places in your final answer) (15 Points) Enter your answer 2:33 E4 Rate r = 11% Number of compunding periods m=2 EAR = (1 +r/m) - 1 = (1 + 0.11/2)2 - 1 = 0.113 or 11.3% Suppose y was the monthly rate (1 + y)2 - 1 = 11.3% (1 + y)2 = 1.113 (1 + y) = (1.113)(1/12) = 1.00896 y = 0.00896 or 0.896% (0.9% rounding off to 2 decimal places) Total Loan amount PV = $10,000,000 Number of months n = 10 x 12 = 120 Monthly rate = 0.9% PV = Px [1 - (1 + r)"]r P= PV xr/[1 - (1 + r)-") = 10,000,000 x 0.009 (1 (1 + 0.009)-120] = $136,372.87 (Note that the above value is obtained without rounding the value of r in the calculations; ther used was 0.8963394%. If 0.9% was used the monthly payments would be $136,620.34) Intercontinental Inc. is an outdoor furniture company that is planning to considerably grow over the coming years. Gaining very good reputation with its high-quality products, the company is projecting that it can grow at 10% over the coming 4 years and then the growth rate will decrease to 3% thereafter. Its earning per share (EPS) this year was $4 and the company's dividend pay-out ratio was 30%, that is its most recent dividends was $1.2. In order to finance this growth, the company needs to invest in new machinery and working capital. The company is considering three financing options to finance this growth: Either to raise equity, get an amortising loan from its bank or issue a bond. if the company chooses to raise equity, what would be the expected price/share given the projected growth rates and given that the expected return on the company's equity is 15% (assume the company uses the divided discount model). [Remove dollar sign and keep two decimal places in your final answer) 03 5. What would be the total interest payments after 5 payments? (show the amortization table in your workout submitted on moodle in order not to lose marks). [Remove $ sign & commas and keep two decimal places in your final answer) (15 Points) Enter your answer 2:33 E4 Rate r = 11% Number of compunding periods m=2 EAR = (1 +r/m) - 1 = (1 + 0.11/2)2 - 1 = 0.113 or 11.3% Suppose y was the monthly rate (1 + y)2 - 1 = 11.3% (1 + y)2 = 1.113 (1 + y) = (1.113)(1/12) = 1.00896 y = 0.00896 or 0.896% (0.9% rounding off to 2 decimal places) Total Loan amount PV = $10,000,000 Number of months n = 10 x 12 = 120 Monthly rate = 0.9% PV = Px [1 - (1 + r)"]r P= PV xr/[1 - (1 + r)-") = 10,000,000 x 0.009 (1 (1 + 0.009)-120] = $136,372.87 (Note that the above value is obtained without rounding the value of r in the calculations; ther used was 0.8963394%. If 0.9% was used the monthly payments would be $136,620.34)
