logo

FIN203 Corporate Finance Assignment: Bond Price

   

Added on  2020-05-28

8 Pages1388 Words63 Views
Running head: CORPORATE FINANCECorporate FinanceName of the Student:Name of the University:Authors Note:

CORPORATE FINANCE1Table of Contents2d.i) Calculating bond price if today is 6/12/2018:....................................................................22d.ii) Comparing bond price with figure above and stating why the bond is selling at par:.....22e.) Depicting current share price of Shell in euros:..................................................................33a) Depicting Free cash flow of the Shell’s gas project:...........................................................43b.a) Depicting NPV of the project when WACC is at 5.94%:.................................................63b.b) Depicting NPV of the project when WACC is at 8%:......................................................8Reference and Bibliography:....................................................................................................10

CORPORATE FINANCE22d.i) Calculating bond price if today is 6/12/2018:ParticularsValueFace Value $ 100 Coupon Rate p.a.2.25%Half Year Coupon Rate1.13%Coupon Payment 1.13 Yield Rate2.62%Half Yearly Yield Rate1.31%Total Period6No. of Coupon Payments12Market Price of Bonds $ 97.96 2d.ii) Comparing bond price with figure above and stating why the bond is selling atpar:The overall evaluation mainly indicates that bond value is mainly less than par forRoyal Dutch Shell, as it is valued at $97.96. This relevant decline in valuation is mainly dueto the rising yield rate incurred for the bond. The difference in bond coupon payment rate andyield rate is mainly declining value of the bond to $97.96, which is less than the par value of$100. Therefore, it could be understood that the reduced coupon payment in comparison withyield rate could directly decline value of bond in the market. Ballotta and Kyriakou (2015)mentioned that bond value mainly increases when interest rate declines, as investors are ableto generate higher return from investment. However, any increment in the interest rate coulddirectly reduce value of the bond, as investor will not be able to generate high returns frominvestment.2e.) Depicting current share price of Shell in euros:ParticularsValueCurrent share price in Euro € 28.93 EUR to USD $ 1.22 Market return9.00%Risk free rate1.25%Annual dividend in USD $ 1.41

End of preview

Want to access all the pages? Upload your documents or become a member.

Related Documents
FIN203 Corporate Finance Assignment (doc)
|4
|490
|33

Weighted Average Cost of Capital
|14
|3759
|61

Formula for Holding Period Return
|6
|1223
|76

Finance Assignment- Woodside Petroleum Ltd
|5
|809
|52

FIN203 Corporate Finance Assignment | Woodside Petroleum Ltd
|11
|2049
|76

BAO5534 Business Finance Assignment: Sun Ltd
|10
|1184
|188