You are newly hired consultant for MZ Sdn Bhd. You are required to analyze the debt securities of the organization. The firm has outstanding
You are newly hired consultant for MZ Sdn Bhd. You are required to analyze the debt securities of the organization. The firm has outstanding loans and bonds. A review of the Statement of Financial Position shows the following: Liability Amount Nominal Interest Years to Maturity (RM) (coupon) Rate Selected Liabilities of the firm Simple Loans 800 5% 1 Fixed-Payment Loans 5,000 12% 19 Long-term Bonds #1 500,000 10% 4 Long-term Bonds #2 1,080,000 10% 10 Liabilities Total Market Price for Bond #1 1,585,800 930.50 Market Price for Bond #2 Face Value of Each Bond 859.50 1,000.00 Selected Current Assets of the firm Market Securities Treasury Bills 100,000 Note: Treasury Bills have a RM 10,000 face value, which matures in one year. Each Treasury Bill has cost of RM9,580.00 Required: a. How much interest would the firm pay each year on the simple-interest loan? b. How much would you write a check for to pay off the loan in one year? c. What is the monthly payment needed to pay off the fixed-payment loans? d. What is the current yield for each bond if the current price is: i. RM930.50 for Bond #1 ii. RM859.50 for Bond #2 Level: III (10 marks) e. Identify and discuss briefly the factors that influence the market value of traded bonds. Level: II (10 marks)
Step by Step Solution
There are 3 Steps involved in it
Step: 1
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started