Business Finance Homework Help

Assignment 5 – Stock, Bond and Small Business Valuation (60 points)

YOU ARE TO COMPLETE ALL OF THIS WORK IN EXCEL ONLY AND NO OTHER DOCUMENT FORMAT IS ACCEPTABLE.INDIVIDUAL WORK IS ONLY ACCCEPTABLE.

FINAL PROJECT PRACTICE

• You are to go to http://finra-markets.morningstar.com/BondCenter/Default.jsp?part=3and search for your company by ticker symbol or company name.You will gather information on two bonds that you want to value using a required rate of return of 6.5%. If you only can find one bond, you may find the other bond from one of the class companies (use GLW). (10 points)
• You are to use your forecast, and complete a DCF calculation using corporate valuation tab in the class spreadsheets we are using to value your company.You will need to justify the discount and growth rates.You should use the common shares outstanding from your spreadsheets to determine the value per share in order to compare to the current stock price.You must provide two sentences on the differences between your valuation and current stock price. (10 points)

For each problem, provide a 1-2 sentence explanation of each answer, which will have points for the explanation.

• What are considered risk free securities and where can you find this information on a daily basis?What are the additional premiums added to the coupon rate to compensate a buyer for additional risk?Happy , Inc. has a 12% coupon bond on the market that has 12 years left to maturity.The bond makes semi-annual payments.If the YTM on the bonds is 13.5%, what is the current bond price?If the payments are annual, what is the price you should pay for the bond? (10 points)
• What are the four stock valuation methods?Zig Zag Corp. will pay a $3.55 per share dividend next year.The company pledges to increase its dividend by 2.8% per year, indefinitely.If you require a 12% return on your investment, how much will you pay for the stock today? (10 points)
• What is the difference between common and preferred stock? What is treasury stock? Happy, Inc. has an issue of preferred stock outstanding that pays s $15.25 dividend per year, in perpetuity.If you are seeking a 11% return, what are you willing to pay for this stock? (10 points)
• Find the current dividend paid for your company to stockholders.Assuming the dividend remained constant for the near future, what is the value of the stock if you are looking for a return of 4.5% and 10%?How does this compare to the current price?What is the difference or problem?What if the company decided to grow the divided by 4% per year in both cases and had the same returns from the first valuations, what would the value be under the different returns? (Hint:There are four calculations) (10 points)