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Simple,Inc. has one real asset, valued at $300 million, and one outstanding bond issue, having a… 1 answer below » Simple,Inc. has one real asset, valued at $300 million, and one outstanding bond issue, having a total face value of $100 million and a coupon rate of 5%. Interest is paid annually, and the bond issue matures in six years. Simple will issue no new bonds after the issue matures. Simple stock currently trades at $20 per share and it will pay a dividend of $1.15 per share in the coming year. Simple faces a tax rate of 35%. a. Suppose the bond issue currently trades at $95 million. Calculate the yield to maturity to the nearest percentage point. b. Suppose the risk free rate is 3%, the market View complete question » Simple,Inc. has one real asset, valued at $300 million, and one outstanding bond issue, having a total face value of $100 million and a coupon rate of 5%. Interest is paid annually, and the bond issue matures in six years. Simple will issue no new bonds after the issue matures. Simple stock currently trades at $20 per share and it will pay a dividend of $1.15 per share in the coming year. Simple faces a tax rate of 35%. a. Suppose the bond issue currently trades at $95 million. Calculate the yield to maturity to the nearest percentage point. b. Suppose the risk free rate is 3%, the market risk premium is 7% and the beta of Simple’s real asset is 1.2. Use CAPM to estimate the OCC of Simple’s real assets. c.Calculate Simple’s market value, return on equity and CCC. d.Estimate Simple’s share price one year from now. View less » Sep 17 2015 11:30 AM
