Harward International College Business Finance Questions Follow instructions attached, no plagiarism, in addition to your numerical work, you should provid

Harward International College Business Finance Questions Follow instructions attached, no plagiarism, in addition to your numerical work, you should provide an explanation of your methodology and justify your choice of inputs in the formula. Remember to show all your calculations in detail. Question 1
Please answer all questions.
Assume it is 1 January 2017. An investor has researched two possible bond investments, but an
intermittent printer fault has caused some important information to be missing from the printout. The
latest coupon on each bond has just been paid. Each bond has a face, or par, value of £1000. The investor
assumes that each bond pays coupons annually.
Bond
Coupon rate
Maturity
ABC
6.50%
31 December 2022
XYZ
4.45%
31 December 2024
Current price
Yield to maturity
?
£838.45
5.50%
?
i. Complete the table by calculating the current price of bond ABC and yield to maturity of bond XYZ
(10 marks).
ii. The investor subsequently realises that the printer had not detailed the fact that
the ABC bond makes semi-annual coupon payments. Recalculate the current price of the ABC bond.
(10 marks)
.
iii. Analyze the answers in (i) and (ii) above as an investor. Which coupon option would you choose
and why? (10 Marks).
.
iv. Assume for ABC corporation only, market interest rate increases, which results in increase YTM
to 6.50%. What will be the revised current price of the Bond? What will you deduce about the
relationship between market interest rate and bond prices? (10 Marks)
Question 2:
In this question you are required to extract financial information on Texas Instruments which can be found
in its annual report. You should refer in
particular to Texas Instruments’ 2019 consolidated financial statements. The notes to these statements
may also be relevant. You are required to:
a.
use two appropriate methods to calculate the cost of equity for Texas Instruments (20 marks)
b.
use two methods to calculate a cost of debt for Texas Instruments (20 marks)
c.
If you have to select one of the methods from above, which one would you choose and why? (10
Marks)
d.
If you would be prospective investor, would you invest in Texas shares or bonds? Specify the
reason. (10 Marks)
Make sure you clearly describe and reference the source of the information used in your calculations. If you
would like to use an additional approach that requires external information, you should provide details of
these additional sources and your reasons for using them.
Note the following:
· the risk-free rate is 1.64% p.a.
· the equity risk premium is 3% p.a.
In addition to your numerical work, you should provide an explanation of your methodology and justify
your choice of inputs in the formula. Remember to show all your calculations in detail.
Note: this question is not just testing your ability to derive calculations; it is also looking at your
understanding of which financial information is relevant for the calculations and how to deploy it.

Purchase answer to see full
attachment