You are given the following information regarding Green Packaging Solutions (Pty) Ltd's funding structure: 7 500 bonds issued with a nominal value of R1 500 each and time to maturity of 15 years. It pays an annual coupon rate of 11% per annum and the current market return on similar bonds with a maturity date of 15 years is 12% per annum (pre-tax). 500 000 ordinary shares are in issue with a nominal value of R45 per share. The next dividend payable will be R9 per share. It is expected that dividends will have a long-term sustainable growth rate of 5%. The shares have a current market value of R80 per share. The corporate tax rate is 28% Determine the total market value of equity for Green Packaging Solutions (Pty) Ltd? Set your calculator to four decimal places and round the final answer to the nearest rand. If slight rounding differences occur - choose the alternative that is closest to your answer. (a) R 600 000 (b) R 3 000 000 (c) R22 500 000 (d) R40 000 000
You are given the following information regarding Green Packaging Solutions (Pty) Ltd's funding structure: 7 500 bonds issued with a nominal value of R1 500 each and time to maturity of 15 years. It pays an annual coupon rate of 11% per annum and the current market return on similar bonds with a maturity date of 15 years is 12% per annum (pre-tax). 500 000 ordinary shares are in issue with a nominal value of R45 per share. The next dividend payable will be R9 per share. It is expected that dividends will have a long-term sustainable growth rate of 5%. The shares have a current market value of R80 per share. The corporate tax rate is 28% Determine the total market value of equity for Green Packaging Solutions (Pty) Ltd? Set your calculator to four decimal places and round the final answer to the nearest rand. If slight rounding differences occur - choose the alternative that is closest to your answer. (a) R 600 000 (b) R 3 000 000 (c) R22 500 000 (d) R40 000 000
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:You are given the following information regarding Green Packaging Solutions (Pty) Ltd's funding structure:
7 500 bonds issued with a nominal value of R1 500 each and time to maturity of 15 years. It pays an annual coupon
rate of 11% per annum and the current market return on similar bonds with a maturity date of 15 years is 12% per
annum (pre-tax). 500 000 ordinary shares are in issue with a nominal value of R45 per share. The next dividend
payable will be R9 per share. It is expected that dividends will have a long-term sustainable growth rate of 5%. The
shares have a current market value of R80 per share.
The corporate tax rate is 28%
Determine the total market value of equity for Green Packaging Solutions (Pty) Ltd? Set your calculator to four decimal
places and round the final answer to the nearest rand. If slight rounding differences occur - choose the alternative
that is closest to your answer.
(a) R 600 000
(b) R 3 000 000
(c) R22 500 000
(d) R40 000 000
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