The assessment has been conducted on the continuous evaluation. The current value of the stock along with the basic characterization of bond and stock has been identified. The relationship between bond and stock has also been delineated with the help of a graph. The methods of NPV, IRR and Payback Methods have been identified through this assessment.
Through the support of the mini case study, this has been observed that the implication of cash dividend has been associated to provide profitable results on the part of the investment. Thus, it can be stated that the providence of investment will help to put the focus on the present situation based on the scene of stock value. This has played an important step towards the projection of stock value exchange that will help the Brigapenski Co. to move ahead smoothly. The collaboration of cash dividend will help to generate a certain specification based on the development of the value of the stock exchange. The proper functioning of the Brigapenski Co. can be presented through the support of $2 per share and this will help the organization to maintain its position in the international market.
Thus, it can be suggested that the implication of the dividend calculation will help to incorporate developing features in the organization and create tough competition with its rival organizations. However, in terms of proper development, the organization will take help from the propagation based on the scene of a dividend solution. The involvement of investors that have come up with 16 percent from the investment will help the organization to grow the share of the organization into the formulation of $2 per share (Harahap, 2018).
The above-mentioned question has helped to portray the importance of face value that helped to created numbers of percentages into the number of 10. The scenario has demonstrated the implication of maturity value that delves with the projection based on the scene of 20 years of implication. This will help to emphasize the projection of a bond’s value that will inversely help to create further development on the organization. The implication of the annual yield will affect the organization to put the focus on the part of the level of performance. This will also elevate the range of development on the organization backed by the power of $1,000 face value.
Henceforth, it can validate that the implication of face value will help to create a level of development on the part of further effectivelythat renovates its activities to come up with the projectioninto the portion of the organization. Moreover, the presence of face value will help to adjust the specification based on the presence of impact value. In a nutshell, this has been comprehendedthat the implication of face value helps to generate positive signs in the organization to present enhancing performance quality.
WACC is the short form of Weight Average Cost of Capital and this can be told as the calculation of an organization’s cost of capital and in this every sort of capital is prejudiced proportionately. All of the sources for capital such as common stock, bonds, preferred stock and other long term debt are encompassed in the calculation of WACC (Investopedia, 2019). The WACC of an organization can be raised as the beta along with rate of return on equity enhances. The prime reason behind it is an increment in WACC identifies a reduction in valuation along with an increase in risk.
In order to estimate the Weight Average Cost of Capital (WACC), it can be said that the analyst should multiply the cost of every capital component with the help of its comparative weight. The sum of these outcomes is, in turn, multiplied by the rate of business tax or 1 (Investopedia, 2019). This methods needs to be applied by following the above formula.
WACC can be considered as very significant for the organizations in terms of their decisions of investment. It can be revealed as very significant as well in order to evaluate projects with the similar along with dissimilar risks. The calculation of important metrics such as net present values along with economic value cannot be possible without Weight Average Cost of Capital (WACC). This can be considered as similarly vital as well for the investors to make valuations of the organizations. This is important also for providing the discount rate for a financed project because the cost of financing the capital can be considered as a fairly rationalcost tag to put on the investment. This is utilized as well in the DCF valuation model.
The stock and bond are related to the various investment strategies that can be beneficial for an organization or a corporation in the long run. The investment strategies are therefore highly helpful in creating a proper scope for the investment of the cash that needs to be protected. The tradable investment assets include the stock and the bond which have monetary value in terms of protecting the cash (Becker and Ivashina, 2015). The stock and bond are two of the most traded assets that are highly available on sale through the various platforms and markets. There are various sets of differences within the investment strategies of a bond and a stock in the market sphere.
The basic difference between the two is that stocks are known as shares or equity in a public trading company (Koijen et al., 2017). The bonds on the other hand are assets for fixed income loans that an investor is deliberately making to the government or a corporation. Within the sphere of the bond market, the investors are trading bonds and debts that can be verified by the governing body. The bond market is highly accessible in regulating the money that is being set for a certain period and the money that is being lent is also bounded by set of interest rates. The stock market is one where the investors are buying a small portion of the company and plans to earn profit based on the profit earned by the corporation or the enterprise.
The bonds are constricted by interest rates that are imposed upon the issuer for paying the rate of interest for lending the money. The basic relationship between the bond and the interest rates are of inverse relationship. This inverse relationship is determined when bond goes up, the interest rate goes down (Amiraslani et al., 2017). Thus the prevailing market rates are inverse in relation to the bond and have a significant effect on the rate of interest. The relationship between the bond and the interest can be presented with the help of a graph:
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