Q1. A 8.

80% 2025 bond pays interest annually and has a face value
of 100. Calculate the price at which the bond should be trading if
the interest rate in the economy is 8%.
Q2. A 6.30% 2025 bond pays interest annually and has a face value
of 100. Calculate the price at which the bond should be trading if
the interest rate in the economy is 7%.
Q3. Shivram Corporation Ltd. has the following capital structure:
Equity 40%
Debentures 40%
Bank loan 10%
Preference Shares 10%
The risk free rate of return is 10%, market rate of return is 15% and
beta of the stock is 1.6, the bank loan comes at an interest rate of
14% p.a., the preference shares pay a dividend of Rs. 9 and trade at
a market price of Rs. 60, the debentures pay an interest rate of 12%
p.a. for a 10 year debenture with a floatation cost of Rs. 4 for a Rs.
100 debenture. The tax rate applicable for the company is 25%.
Calculate the WACC for the company.
Q4. Jesmol Corporation Ltd. has the following capital structure:
Equity 60%
Debentures 25%
Bank loan 5%
Preference Shares 10%
The risk free rate of return is 8%, market rate of return is 18% and
beta of the stock is 1.2, the bank loan comes at an interest rate of
15% p.a., the preference shares pay a dividend of Rs. 12 and trade
at a market price of Rs. 80, the debentures pay an interest rate of
12.5% p.a. for a 5 year debenture with a floatation cost of Rs. 5 for a
Rs. 100 debenture. The tax rate applicable for the company is 40%.
Calculate the WACC for the company.
Q5. Sonal Group Ltd. paid a dividend of Rs. 20 last year and the
company is expected to grow @ 20% p.a. for 3 years and then
expected to grow @ 12% per annum for perpetuity. The required
rate of return from the stock is 16% p.a.
Calculate the value of the stock as per the dividend discount model.
Q6. Manasi Group Ltd. paid a dividend of Rs. 10 last year and the
company is expected to grow @ 10% p.a. for 3 years, 8% for the
following 2 years and then expected to grow @ 5% per annum for
perpetuity. The required rate of return from the stock is 12% p.a.
Calculate the value of the stock as per the dividend discount model.