Finance: TVM and Bond Valuation, Risk and Return Estimates, Risk and Return Analysis of a Company

Running head: FINANCE
Finance
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1FINANCE
Table of Contents
Answer to question 1: TVM and Bond valuation............................................................................2
Sub part (a):.................................................................................................................................2
Sub part (b):.................................................................................................................................2
Sub part (c):.................................................................................................................................2
Sub part (d):.................................................................................................................................3
Sub part (e):.................................................................................................................................3
Sub part (f):..................................................................................................................................4
Answer to question 2: Risk and return estimates.............................................................................4
Sub part (a):.................................................................................................................................4
Sub part (b):.................................................................................................................................5
Answer to question 3: Risk and return analysis of the company:....................................................5
Overview of the company:...........................................................................................................5
Financial Performance:................................................................................................................5
Risk and Return measures of the company:..............................................................................10
Conclusion and recommendation:.............................................................................................10
References and bibliography:........................................................................................................11

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3FINANCE
Answer to question 1: TVM and Bond valuation
Sub part (a):
Computation of Discounted value of the instalments
Monthly Instalment Amount $ 29,100
Number of years 4
Number of Payment per year 12
Annual Discount rate 7%
Discounted Value of the instalment $ 12,15,222
To compute the discounted value of the installments, a discount rate of 7% has been
considered and a total number of 7 years have been taken. The present value of the installments
is to be the discounted value of the installment, which the bank will give to the company.
Sub part (b):
Computation of Expected Revenue in 5 years with a 6.6% growth rate
Annual Operating Revenue $ 57,31,100
Annual growth rate 6.60%
Number of Years 5
Expected annual revenue in 5 years $ 78,89,037
The Annual sales are compounded with the annual growth rate to arrive at the expected
sales at the fifth year.
Sub part (c):
Computation of Effective Annual Interest Rates for the following loans
Loan A Loan B Loan C
Loan Amount 4.93% 5% 4.91%
Compounding terms Monthly Semi-annually Daily
Compounding period in a year 12 2 365