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Calculate the value of shares today

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Q1. BP Ltd issued unsecured notes with a 10% coupon rate per year, with interest payable semi-annually in arrears, maturing in 10 years, with a face value of $100m. If the notes were issued at a yield set 2% higher than 10-year bond rate (which was running at about 7%), What was the value of securities (unsecured notes) by BP?

Q2. Assume on the recovery of COVID-19 in Australia G Ltd will be growing at a phenomenal rate of 15 per cent. It is also believed that this growth rate will be last for three more years and drop to 7 percent per year and remains this rate indefinitely. As well, assume that total unfranked dividend just paid were $33 million for 11 million shares.

Required - Based on non-constant growth, calculate the value of shares today assuming the required rate of return is 12 percent. What would be the total value of equity and price for each share today?

Reference no: EM133159242

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