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CAPM and Bond Yields

   

Added on  2019-10-01

10 Pages1549 Words167 Views
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FinanceName of the Student:Name of the University:Authors Note:
CAPM and Bond Yields_1

Table of ContentsAnswer to question 1:.................................................................................................................3Answer to question 2:.................................................................................................................7Answer to question 3:.................................................................................................................9Bibliography.............................................................................................................................11
CAPM and Bond Yields_2

Answer to question 1: Answer to part a:In the given case, the question asks about the present values of the all instalmentpayment that will be received by the company. The company has initiated a sale but thepayment will be received in 48 equal instalment. To meet its needs the company needs todiscount the payment receivable form the bank. When the rate of discount is 7% compoundedmonthly, the payment will be calculated by calculating the Present values of annuitycompounding on monthly basis. Further, as the interest is compounding monthly therefore themonthly interest rate is required to be considered.Rate Of Discount7%compoundingMonthlyInstalment per month10000payment Period48Monthly Interest rate0.583%Present valve of monthly instalments (Annuity)417602.0141The Deta Of the Bega Cheese is as follows:Bega cheese (BGA)Case Company DataInstalment Per Month10000Annual Total Revenue ($ millions)1438.28Annual Growth in total Revenue7.40%Loan A ( APR Compounding Frequency)7%Loan b ( APR Compounding Frequency)6.95%Loan C ( APR Compounding Frequency)6.97%Property Cost 8,11,000.00 8 Year Bond annual coupon rate5.60%8 year current price 117.006 year Bond Required rate of Return4.10%Part b:
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