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Please build the following model in your shared Google Sheet that I shared with you, and go through the steps below. MODEL DETAILS BOND
Please build the following model in your shared Google Sheet that I shared with you, and go through the steps below. MODEL DETAILS BOND MODEL Your company wants to issue 30 year fixed bonds in the debt markets to raise money. Your model has the following two outputs: Price of the bonds you are issuing How much money will be raised Your model requires the following inputs: number of bonds issued principal per bond coupon rate Yield-to-Maturity Assume the bonds pay coupons annually. STOCK MODEL Your company is looking to raise money by issuing shares of stock. You build a model with the following output: Price of 1 share of stock Total money raised from stock issuance Your model has the following inputs: Dividend at year 0 Dividend Growth rate during years 1-10 2nd Stage Terminal dividend growth rate Expected return Total shares of stock STEP 2: Build Model Please build the model so that it is user friendly, represents all cash flows on a timeline, and directly solves the quiz questions (see rubric below). If you are unable to build the model, you may answer the selection "watch video" on the first quiz question, which will show you a step-by-step video (you will lose 3 points if you select "watch video"). If you do not need to watch the video, then select "do not watch video" and you will not get any points deducted from the quiz. BOND MODEL If you have built the model correctly, you will have a total amount raised of $1,098,908 given the following inputs for a 30 year, fixed bond, paid annually: number of bonds issued = 2,000 principal per bond = $1,000 coupon rate = 2.4% Yield-to-Maturity = 5.5% STOCK MODEL If you have built the model correctly, you will have a total amount raised of $19,872,064 given the following inputs: Dividend at year 0 = $3.55 Dividend Growth rate during years 1-10 = 5.5% 2nd Stage Terminal dividend growth rate = 3.5% Expected return =8.9% Total shares of stock = 250,000 Inputs: Number of bonds issued Principal per bond Coupon rate Yield-to-Maturity Coupon Payment Principal Total Cashflows Bond Price Total Money Raised YEARS 2,000 1,000 2.40% 5.50% OOOO 1 24 0 24 2 3 4 5 6
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