Question
Morntrip Co. has more than 20 years experience of manufacturing non-woven products from raw materials to finished products of spun bond, melt blown, disposable face
Morntrip Co. has more than 20 years experience of manufacturing non-woven products from raw materials to finished products of spun bond, melt blown, disposable face masks, medical gowns, coverall, lab coats, etc. for epidemic and virus and flu protection. The best-selling products are their disposable face masks and microporous coverall. These products have shown a tremendous demand especially during the COVID19 pandemic which led Morntrip Co. to aggressively increase their production of the high level of protection of disposable face masks to defense from the new coming variants including the Omicron virus. The launch of the new line of products will become their main strategic priority for the next two years and will incur high investment worth RM 77 million in production and processing facilities. Morntrip Co. needs to finance the RM 25 million on the development by using its own liquid asset and RM 52 million by issuing bonds with a maturity period of 22 years. Morntrip Co. offers a coupon rate of 7%, which is paid semi-annually on its twenty-two-year bonds. Required: a. How much money will Morntrip Co. realize from its RM 52 million bonds issue if the actual yield is either (i) 6% or (ii) 8%, (5 marks) b. If this bond can be traded in the market for RM 1055, then what is its yield to maturity? (YTM)?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started