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Nthanda PLC is an International food retailing company financed by both debt and equity capital. The total market value of company's equity is K26.4 million
Nthanda PLC is an International food retailing company financed by both debt and equity capital. The total market value of company's equity is K26.4 million ex-dividends. The company has recently paid a total dividend of K4 million to its shareholders. This is in line with the company's policy of increasing dividends by 5% per annum. Nthanda has an equity beta value of 1.86. The yield on short-term government debt is 7% and equity risk premium is 7.4%. Nthanda PLC has K50,000 9\% irredeemable preference shares in issue. The nominal value of each share is K1. They are currently quoted on the stock exchange at 72p ex-dividend. In addition, the company has issued K12.6 million of 8% irredeemable bonds. They are currently quoted at K80, ex interest. Corporate tax currently stands at 35%. A. Being an international company, Nthanda International PLC is always faced with several risks, including foreign exchange risks, discuss with examples, how the risks of foreign trade might be managed in the Company. (5 Marks) B. Nthanda PLC has in its plans to extend its business activities beyond the boarders and considering to merge or acquire as penetration strategies. Discuss the reasons for Nthanda PLC undertaking a large-scale acquisition or merger and identify the major problems associated with such a transaction
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