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  3. black gold ltd currently has the following capital structure debt...

Question: black gold ltd currently has the following capital structure debt...

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Black Gold Ltd. currently has the following capital structure: Debt funding: A callable bond that pays annually 10.5% coupon rate with an annual before-tax yield to maturity of 9.7%. The bond issue has face value of $1,000 and will mature in 16 years. Ordinary equity funding: An ordinary share that just paid a $6.50 dividend per share in the current financial year. The firm is maintaining 4.5% annual growth rate in dividend, which is expected to continue indefinitely. Hybrid - funding: A preferred share with face value of $100, paying fixed dividend rate of 15%. Required: a) Calculate the current price of the corporate bond? (2 marks) b) Calculate the current price of the ordinary share if the average return of the shares in the same industry is 11.5%?(2 marks) c) Calculate the current value of the preferred share if the average return of the preferred shares in the same industry is 12.5%

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