ACC00716 Finance - Business Case Study Assignment Solution

Q1.

971. MYOB will receive $538,971.43 now, after the discounted installment contract.
972. The annual operating revenue after 5 years for MYOB will be $720,264,069.60
973. MYOB would pick the loan option with the lowest EAR, which is option C 5.54% compounding daily @ 5.4%.

EAR- A: 5.58%

EAR- B: 5.57%

EAR- C: 5.54%

699. Quarter payments are $12,699.93, the loan is amortized on monthly payments, with quarterly compounding of interest which is adjusted accordingly. 

5. The Yield to Maturity on the bonds is 5.356%.
6. The Coupon Payment is $35.

Q2. 

Expected Return =YTM(Risk-Free Rate)+(Beta x Market Rate Premium)

Expected Return-MYOB = 1.9%+(0.36x6%)

Expected Return-HYPO = 1.9%+(-0.2x6%)

b.

Weighted Average

Portfolio Return = (Return x Weightage) + (Return x Weightage)

Portfolio Return = (4.06%x 50%) + (0.70% x 50%)

Portfolio Beta= (Beta x Weightage) + (Beta x Weightage)

Portfolio Beta= (0.36x 50%) + (-0.2 x 50%)