Question (25 Marks) Healthy You Limited is a major player in the health sector. The company recently implemented a project to reduce its costs and increase its competitiveness. The project was financed by issuing new debt. On January 1, 2019, they issued new bonds which will mature on December 31, 2043. The bonds have a par value of $1,000 and a coupon rate of 9%. Coupon payments are made semi-annually. i) What would be the value of the bonds on December 31, 2022, if the interest rates had risen to 16%? Based on the price of the bond, how would you classify the bond? (9 Marks) ii) What would be their value on June 30, 2029, if interest rates had fallen to 8%? Based on the price of the bond, how would you classify the bond? .. (9 Marks) iii) If the bonds had a value of $1,045.00 on January 1, 2029, what would be their yield to maturity on that date? (7 Marks) You have been tasked with the responsibility of calculating the WACC for Sanderson Financials Limited and Davis Producers Limited. The risk-free rate is currently 4% and the market risk premium is 6.5%. The details for both companies are presented in the table below. The tax rate is 25%. Sanderson Financials Limited Davis Producers Limited $1,800,000 Value of Common Equity $2,800,000 Beta 2.81 1.25 Value of Preferred Equity $1,200,000 $1,000,000 Preferred Dividends $5.40 $6.70 Price of Preferred Stock $80 $65 Price of Bonds $940 $1,060 12% Coupon Rate (Paid semi-annually) Par Value of Bonds $1,000 $1,000 Years to Maturity Value of Debt $2,000,000 $1,200,000 Use the information in the table above to calculate the WACC for both companies. (25 Marks) Question Marks) (25 Howlett, Newman & Associates Limited is considering four projects to modernise their operations. The initial capital outlay for each project is $280,000. The cost of capital for the company is 8%. The cash flow for each project are detailed in the table below. Year Import/Export Restaurant Transportation Landscaping Initial (280,000) (280,000) (280,000) (280,000) Outlay 1 125,000 185,000 150,000 2 88,000 66,000 3 69,000 56,000 52,000 160,000 4 42,000 38,000 60,000 132,000 5 62,000 65,000 NO 30,000 i) Calculate each project's Payback period (8 Marks) ii) Calculate each project's Net Present Value (NPV). (12 Marks) iii) Calculate the MIRR of the project with the highest NPV