The companys share price increased the first day

2. Black Ltd has paid $0.50 dividend every 6 months for the past 3 years. Black Ltd just lowered its declared dividend to $0.40 for the next dividend payment. Discuss what this new information might convey concerning Black Ltd management’s belief concerning the future of the company.

[Answer here]

2. Record Values

3. Calculate and type answer in the space provided.

2. Pan Holdings Ltd issued 10-year bonds 4 years ago with a coupon rate of 9.375 per cent. At the time of issue, the bonds sold at par. Today bonds of similar risk and maturity will pay annual coupons of 6.25 per cent. Assuming semi-annual coupon payments and a face value of $1000, what will be the current market price of the company’s bonds?

[Answer and show workings here]

5. Hexagon Ltd, a high-technology company in Victoria, issues a $85 million IPO with an offer price of $75 per share. The firm receives $72 per share, and the company’s legal fees, ASIC registration fees and other administrative costs are $540, 000. The company’s share price increased to $83 on the first day. What is the company’s total cost of issuing the securities?

[Answer and show workings here]

[Answer and show workings here]

A recent geological survey has provided good results for gold mining in the Pilbara region in Western Australia and the board of directors are keen to proceed with the development of these mining opportunities.

The initial investment to establish the mine is $475m commencing in 2022.

* Note the interest on the bonds is a tax deduction for the company. The current tax rate is 30%, the above cost must be adjusted for tax shield.

You are required to:

4. Determine the amount to be invested now in a sinking fund that will provide the required restoration amount in 2028 if the interest rate on deposits is 6% assume this rate for the 7 years (5 marks)

5. Your recommendation as to the financial viability of the project and your reasons. (5 marks)