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Question 2 Perkasa Corporation Berhad is a construction company specializing in building high end residential property in Klang. The company is expanding its business and
Question 2 Perkasa Corporation Berhad is a construction company specializing in building high end residential property in Klang. The company is expanding its business and would like to issue 100 bonds with par value of RM1,000 each with a coupon rate of 9 percent. The bonds will be matured 12 years from now. Based on the above information, you are required to: a. calculate the total value of the bond if the required return is 7 percent. (2 Marks) b. calculate the total value of the bond if the required return is 11 percent. (2 Marks) C. explain the relationship between coupon rate, required rate of return, market value and the par value of the bond in relation to part (a) and (b) on the above. (6 Marks) MicroSun Computer Berhad (MSCB) is one of the well-known computer manufacturers in town. With good expertise, it is expected that the latest model of MSCB computer will be accepted widely in the market. The management estimate that the earnings and dividends of MSCB to grow at an annual rate of 5 percent indefinitely. MSCB just paid dividend on the ordinary share amounting of RM1 per share. Based on the above information, you are required to: a. Determine the value of MSCB's ordinary share to an investor who requires an 8 percent rate of return. (3 Marks) b. Determine the value of MSCB's preference share if it was issue at RM100 (3 percent). Investors required rate of return on preferred share is 6 percent. (2 Marks)
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