II. Stock Valuation A. Based on the figures provided, calculate each of the following: 1. The new dividend yield if the company increased its dividend per share by 1.75 2. The dividend yield if the firm doubled its outstanding shares 3. The rate of return on equity (i.e., the cost of stock) based on the new dividend yield you calculated above B. What effect would you expect each of the calculations you performed to have in terms of shareholder value? In other words, suppose the companys goal is to maximize shareholder value. How will each of the situations support or inhibit that goal? Be sure to justify your reasoning. C. To what extent do you feel the companys dividend policies support or hinder their strategies? For example, if the company is attempting to grow, are they retaining and reinvesting their earnings rather than distributing them to investors through dividends? Be sure to substantiate your claims. III. Bond Issuance A. Assuming this company already has bonds outstanding, calculate the following: 1. The new value of the bond if overall rates in the market increased by 5% 2. The new value of the bond if overall rates in the market decreased by 5% 3. The value of the bond if overall rates in the market stayed exactly the same B. What effect would you expect each of the calculations you performed to have in terms of the companys decision to raise capital in this manner? In other words, for each situation, would you consider bond valuation to be a viable option for increasing capital? Be sure to justify your reasoning. C. To what extent do you feel the companys bond issuance policies support or hinder their strategies? For example, if the company is attempting to fund operating expenses, refinance old debt, or change its capital structure, are they issuing sufficient bonds to achieve these goals? Be sure to substantiate your claims. Milestone Two: Stock Valuation and Bond Issuance (please fill in the shaded YELLOW cells)
PART I: STOCK VALUATION
	Dividend from Financial Statements:
	Year	Cash Div/share ($)	Dividend Yield	Stockholder's Equity (in millions)	Stock Price
	2012	1.16	2.30%	17,777	50.43478261
	2013	1.56	2.20%	12,522	70.90909091
	2014	1.88	2.30%	9,322	81.73913043
1. Stock Valuation - The new dividend yield if the company increased its dividend per share by 1.75
	Year	Cash Div/Share ($) +1.75	Dividend Yield	Stockholder's Equity (in millions)	Stock Price
	2012	2.91	5.77%	17,777	50.43478261
	2013	3.31	4.67%	12,522	70.90909091
	2014	3.63	4.44%	9,322	81.73913043
2. The dividend yield if the firm doubled it's outstanding shares
	Year	Cash Div/Share ($)	Dividend Yield	Stockholder's Equity (in millions) -doubled	Stock Price
	2012	0.58	1.15%	35,554	50.43478261
	2013	0.78	1.10%	25,044	70.90909091
	2014	0.94	1.15%	18,644	81.73913043
3. The rate of return on equity (i.e., the cost of stock) based on the new dividend yield you calculated above
	Year	Cash Div/Share ($) +1.75	Stock Price	Return on Investment
	2012	2.91	50.4347826
	2013	3.31	70.9090909	3.72%
	2014	3.63	81.7391304	3.78%
PART II: BOND ISSUANCE
	Curent Bonds from Financial Statements
	Present Value	PV	($2,963)
	Periods	N	40	Semi-annual payment: 2036-2016 = 20 years *2 = 40 periods
	Interest	I	2.9375	Interest paid semi-annually: 5.875%/2 = 2.9375%
	Payments	PMT	0	This bond does not make regular PMT except for interest
	Future Value	FV	$2,963.01	CALCULATING FV (please see help on the right hand side)
1. The new value of the bond if overall rates in the market increased by 5%
	Present Value	PV	($2,963)
	Periods	N	40
	Interest	I	5.4375	Please adjust interest		5.875%+5% = 10.875%/2 = 5.4375%
	Payments	PMT	0
	Future Value	FV	$12,926.71	CALCULATING FV (please see help on the right hand side)
2. The new value of the bond if overall rates in the market decreased by 5%
	Present Value	PV	($2,963)
	Periods	N	40
	Interest	I	0.4375	Please adjust interest		5.875%-5% = 0.875%/2 = 0.4375%
	Payments	PMT	0
	Future Value	FV	($267.37)	CALCULATING FV (please see help on the right hand side)
3. The value of the bond if overall rates in the market stayed exactly the same
	- identical to CURRENT BOND VALUE from Financial Statements