You are supposed to address the following question in this corporate finance assignment: You are the new CFO of company X (each student has one company assigned in the following table) listed in the Vietnamese stock market.
Required:
1)What are the three important questions of corporate finance you will need to address in your company? Please briefly explain them and indicate how they are related to the areas in the balance sheet of your company.
2)Calculate Cash flow to creditor, Cashflow to stock holder, Cash flow from the assets for the company in the last three years (2018-2020) based on company financial statement published in its website? Comments about the results
3)Assume that risk free rate was 5%, market risk premium was 4.6%, calculate required return of company’s common stock (hint: looking for company’s beta, remember cite the source of data and using CAPM model for calculation)
4)Assume that your company financed its activities by issuing corporate bond with total value is 15% of total company’s assets in the 31 December 2020 and you want to issue 10-year bonds for this purpose. Suppose that required return on your bond issue will be 9%, and you are evaluating 2 issue alternatives: a semiannual coupon bond with a coupon rate of 9% and a zero-coupon bond, you company’s tax rate is 20%, both bonds will have a par value of VND 100,000.
a)How many the coupon bonds would you need to issue to raise the capital needed?
b)How many zero-coupon bonds would you need to issue?
c)In the 10 years, what will your company’s repayment be if you issue the coupon bonds? What if you issue the zeroes?
d)Based on your answer in the a), b) and c), why would you ever want to issue the zeroes? To answer, calculate the firm’s after-tax cash outflows for the first year under the two different scenarios. Assume the IRS amortization rules apply for the zero-coupon bonds.
My company is Telecomunication Technical Service JSC, Vietnamese name is : Công ty C? ph?n D?ch v? K? thu?t Vi?n thông.
For more details about financials statement: https://finance.vietstock.vn/TST/financials.htm
Full financials statement: https://finance.vietstock.vn/TST/tai-tai-lieu.htm?doctype=1
