Exercises: Revision

1. Seven years ago, Putri purchased a piece of land in KL worth RM300,000. The land is
now worth RM 1,200,000. Putri could have deposited RM 300,000 in a savings account
paying 12% interest compounded annually. Which of these two options would give her
higher return?
2. A community wishes to establish a fund which in 12 years will accumulate
RM500,000.The fund will be used to build a new mosque. The community plans to
deposit in halal investment that will pay 14% return each year, to this fund at the
beginning of each of the 12 years. How large must this deposit to be in every year.
3. You want to buy a new proton saga that cost RM60,000, and the finance office has quoted
you a 4% APR loan for6 years to buy the car.What will be your monthly payment? Make
an amortization schedule.
4. Diza Corp. bond carries 8% coupon, paid semiannually. The par value is $1,000 and the
bond mature in six years. If the bond currently sells for $900, what is its YTM? What is
the effective annual yield?
5. Eva Corp is growing quickly and expected to pay $3 dividend following year. Dividend
will grow by 30% for the next three years, after this it grow by 6 % thereafter. If required
return is 13%, what its market share price today?
6. The following Income statement shows the last year profit position of company A, a
public listed company in Bursa Malaysia.
EBIT
RM20000
Interest
2000
EBT
18000
Tax(30%)
5400
Net Profit
12600
Dividend payout Ratio 40%
No Of shares
3600
What is the price of the stock today if required return 12%.If constant growth rate6%,
what is the maximum price you will pay?
7. For a company, free cash flow.
Year
Amount
2010
RM400000
2011
450000
2012
520000
2013
560000
2014
600000
Growth rate beyond 2014 is 4%. Value of debt RM330,000. Value of preferred stock
RM900,000. Number of shares outstanding 300,000. What is the value of the company today?
What is the trading price per share today?

8. Seven years ago, Putri purchased a piece of land in KL worth RM300,000. The land is
now worth RM 1,200,000. Putri could have deposited RM 300,000 in a savings account
paying 12% interest compounded annually. Which of these two options would give her
higher return?
9. A community wishes to establish a fund which in 12 years will accumulate
RM500,000.The fund will be used to build a new mosque. The community plans to
deposit in halal investment that will pay 14% return each year, to this fund at the
beginning of each of the 12 years. How large must this deposit to be in every year.
10. You want to buy a new proton saga that cost RM 60,000, and the finance office has
quoted you a 4% APR loan for 6 years to buy the car. What will be your monthly
payment? Make an amortization schedule.
11. Diza Corp. bond carries 8% coupon, paid semiannually. The par value is $1,000 and the
bond mature in six years. If the bond currently sells for $900, what is its YTM? What is
the effective annual yield?
12. Company A has two bond issues outstanding and both sell for $701.22. The first issue has
an annual coupon rate of 8% and 20 years to maturity. The second has an identical yield
to maturity as the first bond but only 5 years remain until maturity. BOTH ISSUES pay
interest payment on the second issue if both bonds have par value of $1000.