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 Solution of this Assessment. Hire Experts to solve this assignment for you Before Deadline.
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
- Management and Leadership in Education Assignment, UPM, Malaysia Ms. Sara is a principal at a secondary school in Malaysia who has noticed that her teachers seem stressed and overwhelmed
- MANAGEMENT INFORMATION SYSTEM Assignment, UITM, Malaysia The IT department is significant in maintaining communications networks for small and large businesses
- ASM657: Innovative Thinking Strategy Case Study, UiTM, Malaysia
- Mathematics Assignment, SU, Malaysia Box Company is designing a rectangular box with a square-based pyramid lid that will have a cuboid volume of 2020 m3
- TAX317: TAXATION 2 Assignment, UiTM, Malaysia Business entity located in Malaysia that manufactures taxable goods not exempted under the Sales Tax Act 2018
- Medical Research Case Study, MU, Malaysia A new genome-editing technology namely Clustered Regularly Interspaced Palindromic Repeats has been discovered
- Law Research paper, UM, Malaysia What is the relationship between perceived easiness and excessive spending behavior among young adult by using e-wallet payment method
- ENG1090: Foundation Mathematics Assignment, MUM, Malaysia Radioactive materials, such as Plutonium-239, Radium-226, and others, decay exponentially. The amount of radioactive material
- European Union Law Coursework, UOW, Malaysia On 9th November 2022, a newly established Spanish company called ‘’The Lovely Liquor Company’’ was transporting 500 bottles
- FBF1163 Fundamentals of Programming Assignment, UCSI, Malaysia Presume that your class at UCSI finishes at 6:30 pm and you must travel 6 km to reach your home for dinner