BBF30403: SunTech Bhd is a company that owns several technology stores in Malaysia: Corporate Finance Assignment, WOU, Malaysia
| University | Wawasan Open University (WOU) |
| Subject | BBF30403 Corporate Finance Assignment |
QUESTION 2
(a) SunTech Bhd is a company that owns several technology stores in Malaysia. They are considering opening a new store in Penang taking advantage of the proximity to a university campus.
This project is financed with a zero-coupon bond with a market value today of RM291.26 million. The bond matures in one year. The project will generate a cash flow in two years of either RM300 million with a probability of 60% or RM280 million with a probability of 0.4%. The yield to maturity of the bond is 3% annually. Assume investors are risk neutral. Calculate;
(i) The face value of debt.
(ii) Annual return demanded by investors Explain;
(iii) The difference between yield to maturity and cost of debt (Rd).
(iv) Advantages of financing this project with equity instead of debt.
(b) Your investment portfolio consists of RM15,000 invested in only one stock, Roof Berhad. The risk-free interest is 5%. The expected return is 12% and standard deviation of 40% for Roof Berhad. The market portfolio has an expected return of 10% and a standard deviation of 18%. The CAPM conditions are all verified.
(i) Graph the position of Roof Berhad and market portfolio in Capital Market Line (CML).
(ii) Calculate the systematic risk and idiosyncratic risk of Roof Berhad.
Get Help By Expert
Unleash success in BBF30403 Corporate Finance assignments with our exclusive assignment helper online services, designed for Malaysian students. Explore seamless support, including specialized homework writing help malaysia that allows you to pay our experts for personalized assistance.
Recent Solved Questions
- EPS0317- You are instructed to prepare a sale and purchase agreement for a terrace house in Cheras: Bar Council Malaysia Ethics and Professional Standards Course, Assignment, UKM, Malaysia
- BBPW3203: Financial Management II Assignment, OUM, Malaysia Explain the defensive tactics that firms can use to resist hostile takeovers
- LAW416: Business Law Assignment, UiTM, Malaysia Karim ordered 100 packets of gummy bears from Julie. He instructed Julie to pack 20 packets in 5 boxes to be sent
- PGBM01: Relying only on accounting figures from Income Statement and Balance: Financial Management and Control Assignment, UOS, Malaysia
- BM2614: Principle of Marketing Report, MMU, Malaysia Berhad who they are, what they do, where their presence is global, what are the fast-moving goods they manufacture and distribute, to name some
- LAW434: Malaysian Legal System Assignment, UITM, Malaysia With reference to decided cases discuss the application of the doctrine of stare decisis in Malaysia
- BBF305/03: Investment and Portfolio Management Assignment, WOU, Malaysia Calculate the betas for both stocks and Discuss the problems encounters when testing the CAPM empirically
- MGT6203: Managing Information System Coursework, IIU, Malaysia You are required to read a minimum of three (3)journals, articles, and write a review paper about Industry
- Mpu3223_v2: What is creativity? What are the barriers to creativity?: Entrepreneurship II May 2024 Semester, Assignment, OUM, Malaysia
- PSY231: Evolutionary Psychology Essay, MUM, Malaysia You are required to select one topic or issue from any area of psychology, and explain how the issue can be viewed from an evolutionary psychology perspective
