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White plc is financed by 400,000 $1 ordinary shares and $600,000 12% debentures. The market values are $1.40 ex div and $90% respectively. A dividend of 14c has just been paid and dividends have been growing at 6% p.a. Interest is shortly to be paid on the debentures which are redeemable at a 5% premium in 6 years time.
sir Kd, where 78 is coming from? I use 90 as the question said $90’%
thanksThe debentures are cum int (because the interest is about to be paid).
The ex int value = 90 – 12 = 78.
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