Based on the pro-forma statements prepared in question 2, Insignia Corporation Limited will need external financing in 2021. As such the company is considering issuing a $100,000,000 15-year bond, with an annual coupon rate of 10%, and semi-annualinterest payments.
Required
i. If the company anticipates that the bond will close at a yield to maturity of12%, given the company’s credit ratings and current market conditions, how much would an investor be willing to pay for $1,000 face value of this bond?
ii. Compute the current yield of the bond at this price (from i).
Extracted text: UWI Roytec Qv Search in Document Home Insert Draw Design Layout References Mailings Review View + Share n Times New R... 12 A- A- Aa AaBbCcDdE AaBbCcDdE AaBbCcDC AaBbCcDdEe AaBb( AaBbCcDdEe АаBbСcDdEe AаBbCcDdEe v abe X, x² A Styles Pane Paste I U A Normal No Spacing Heading 1 Heading 2 Title Subtitle Subtle Emph... Emphasis Question 2 Insignia Corporation Limited Income Statement For the year ended December 31, 2021 Sales $1,242,000 20% increase Less: Cost of Goods Sold -$480,000 20% increase Selling and Marketing Costs -$96,000 20% increase Admin Expense -$90,000 20% increase Less: Other Expense -$72,000 20% increase Earnings Before Tax and Interest $504,000 Less: Interest -$30,000 Constant Earning Before Tax $474,000 Less: Taxes at 30% -$142,200 Net Income $331,800 Less: Dividends $132,720 40% of the net income Additional to Retained earnings $199,000 Page 6 of 14 1143 words E English (United States) E3 Focus 110% AZ
Extracted text: UWI Roytec Qv Search in Document Home Insert Draw Design Layout References Mailings Review View + Share n Times New R... 12 A- A- Aa AaBbCcDdE AaBbCcDc AaBbCcDdEe AaBb( AaBbCcDdEe АаBbСcDdEe AаBbCcDdEe v abe X, A Styles Pane Paste I U A Normal No Spacing Heading 1 Heading 2 Title Subtitle Subtle Emph... Emphasis Insignia Corporation Limited Income Statement For the year ended December 31, 2021 Assets Amount Liabilities and Equity Amount Cash (450,200*120%) $540,000 Accounts Payable $210,000$175,000*120% Accounts Receivable $292,560 Notes Payable $100,000 constant (243,800*120%) Inventories $474,000 Total $310,000 (395,000*120%) Total Current Assets $1,306,560 | Non-current debt $835,000 Plug (External $144,680 plug financing needed) Non-current assets net $966,000 Owner’s Equity Common stock $260,000 Retained earnings $722,880 523,900 + 199,080 Total Assets Total Liabilities and $2,272,560 Equity External Finance Needed $144,680 Page 7 of 14 1143 words English (United States) E3 Focus 110% AZ