Q2 (a) Azhar Aziz broker has shown him two bonds. Each has a maturity of 5 years, a par value of $1,000, and a yield to maturity of 12%. Bond A has a coupon interest rate of 6% paid annually. Bond B has a coupon interest rate of 14% paid annually.

(i) Calculate the selling price for each of the bonds.

(ii) Assume that Azhar will reinvest the interest payments as they are paid (at the end of each year) and that his rate of return on the reinvestment is only 10%. For each bond, calculate the value of the principal payment plus the value of Marks reinvestment account at the end of the 5 years.

(iii) Explain which bond is better.

(b) Jaya Berhad paid the following dividends per share from 2011 to 2020 :

If you believe that Jaya Berhad will continue this dividend pattern forever and you want to earn 17% on your investment. Calculate the price of the stock that you are willing to pay as of January 1, 2021.

(c) At year-end 2020, Flina Industriess balance sheet shows total assets of $780,000, total liabilities and preferred stock of $420,000 million, and 10,000 shares of common stock. Upon calculation, Flina Industries found that it could obtain $722,000 if it sold its assets today Given this information, determine Flina Industries :

(i) Book value per share.

(ii) Liquidation value per share

(iii) Discuss about the values found in parts a and b.

2011 2012 2013 2014 2015 2016 2017 | 2018 2019 2020 $0.70|50.80 | $0.925 | $1.095151.275 $1.455 $19] $1.795 $1.93 | 52.11