If someone could show me exactly how to work these out step by step th

QUESTION

If someone could show me exactly how to work these out step by step that would be great!!!!!A.) Dividend valuation model for new public issue. The investment banking firm of Einstein & Co. will use a dividend valuation model to appraise the shares of the Modern Physics Corporation. Dividents (D1
a)i) Price of the stock using Dividend valuation model:The formula for Dividend valuation model is Ke = (D1 / P0) g 0.12 = ($1.44 / P0) 0.08 0.04 = $1.44 / P0 P0 = $1.44 / 0.04 P0 = $36ii) If the underwriting spread is 6%, then the issuing corporation will receive: $36 (1 0.06) = $33.84iii) Net proceeds per share = Offer price (1 Underwriting spread) $34.50 = Offer price (1 0.06) Offer price = $36.7The price at which the stock should be sold to the public is $36.7b) Disadvantages of being public:1) Profit sharing: If a firm is sitting on a highly successful venture, future success has to be shared with outsiders.2) Loss of confidentiality: Going public results in loss of confidentiality in companies operations and policies.3) Loss of control: Outsiders are often in a position to take control of the corporate management and might even fire the company founder.c)i) Coupon rate :Annual coupon payment = Coupon rate * Face value of the bond $90 = CR * $1000 CR = 0.09 or 9%ii) Current rate =

al dollar interest paid / market price of the bond = $90 / $820 = 0.1097 or 11%iii) Calculating the YTM using excel sheet:Step1: Go to excel and click “insert” to insert the function.Step2: Select the “Rate” function as we are finding the yield to maturity in this case.Step3: Enter the values as Nper = 5; PMT = -90; PV = 820; FV= -1000Step4: Click “OK” to get the desired value.The value comes to “14.28%”d) For Plan-A:Total dividend per share over five years = ($1.5 $1.5 $1.5 $1.6 $1.6) / 5 = $1.54For Plan-B:Total Dividend per share for 5 years = ($0.50 $2.00 $0.20 $4.00 $1.70) / 5 = $1.68Therefore, Plan-B is paying the highest dividend per share over the last 5 yrs.

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