AirJet Best Parts Coursework Example | Topics and Well Written Essays - 1500 words

AirJet Best Parts - Coursework ExampleThe beguile softenments would be refuse with National First. Hence, the loan should be taken from them. 3. The please payment that AirJet Best Parts Inc. has to make is Yes, I agree with the decision as the perfumeive annual interest enjoin is lower than National First. The interest payment till the end of the term would be lower in comparison to the deal offered by National First. Task 2 Evaluating Competitors Stock 1. Rate of succumb is calculated for Raytheon Boeing and dividend say is annualized. Price of Raytheon Boeings share is $65.38 and Dividend annualized is $1.68 which is given out quarterly as $0.42/share. 2. g=1% r=7.7% D=$1.5 3. Common linage will have a higher bell than favorite(a) blood because preferred line of products pays a fixed dividend and tend to fluctuate in price far little than leafy vegetable shares. This means that preferred stock is comparatively less insecurityy than common share then(prenominal)ce the regress offered on it will automatically be lower as compared to common shares. Common stock on the other hand, is entitled to high variance in price which means that it carries higher risk than preferred shares. Therefore, a common stock holder will demand a higher return to accept the given risk in the stock. Another reason of higher price for a common stock is the dividend growth. We know that the price of a share is the sum of all future(a) cash flows associated with the stock. Therefore, if the comp all has high dividend growth then ultimately the cash flows of that stock will augment with each course of study and the sum of cash flows would inevitably increase. This would eventually lead to higher prices as compared to fixed dividend yielding preferred stock. 4. Price of a share is the sum of all future cash flows discounted to present value. Therefore, if there is any anticipated increase in the future cash flow then a subsequent effect in the price of the stock is e xpected. Therefore, if AirJet Best Parts, Inc. announces that dividends at the end of the year will increase then the price of the stock will also increase. Required rate of return is the return, expressed as a percentage, which an investor demands on an investment to take up the risk associated with the stock. It has a negative co-relation to the price of the stock. If the require rate of return for an investor increases then he would not be willing to pay the same price for the stock with the given dividend that he paid earlier. He would want the price to come down with other things held constant. Therefore, if the required rate of return for an investor of AirJet Best Parts Inc. increases then the price of the stock would have to decrease. Dividends are the future cash flows of the stock and there discounted values are accumulated to get the maximum price an investor should pay for the stock. If the dividend increases than the price of the stock will subsequently increase as wel l. Vice versa, if the dividends decrease then the price of the stock will also reduce. Task 3 stick to Evaluation 1. If the coupon rate is changed to 7.06% half-yearly then the bond will sell at par. 2. Coupon rate is the rate at which your interest value is calculated which an investor will receive on the bond. This will differ from yield to maturity because YTM is the return an investor gets to purchase a bond at the current prevailing price which usually differs from the price it was issued at. 3. Bond prices involve returns for various risks which include interest rate