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

AirJet Best Parts - Coursework ExampleThe stake payments would be lower with National First. Hence, the loan should be taken from them. 3. The worry payment that AirJet Best Parts Inc. has to make is Yes, I agree with the decision as the core groupive annual interest invest 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 hark back is calculated for Raytheon Boeing and dividend stated is annualized. Price of Raytheon Boeings handle 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 stock will have a higher price than preferred stock because preferred stock pays a fixed dividend and range to fluctuate in price far less than common shares. This means that preferred stock is comparatively less risky than common share therefrom the return offered on it will automaticall(a) y be lower as compared to common shares. Common stock on the other hand, is entitled to high divergency 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 tense cash flows associated with the stock. Therefore, if the company has high dividend growth then ultimately the cash flows of that stock will augment with each yr and the sum of cash flows would inevitably growing. 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 expected. Therefore, if AirJet Best Parts, Inc. announc es that dividends at the end of the year will increase then the price of the stock will also increase. undeniable 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 required 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 extremity 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 well. Vice versa, if the dividends decrease then the price of the stock will also reduce. Task 3 affixation Evaluation 1. If the coupon rate is changed to 7.06% semiannual 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