Southeast Corporation & Auto Star
Autor: Xiaomin Wang • November 14, 2016 • Case Study • 1,484 Words (6 Pages) • 652 Views
Southeast Corporation & Auto Star
Step 2: IRR of Southeast Corp’s Bond[pic 1]
Year | Cash Flow | Yield to Maturity |
0 | (60,000,000.00) |
|
1 | 7,080,000.00 |
|
2 | 7,080,000.00 |
|
3 | 7,080,000.00 |
|
4 | 7,080,000.00 |
|
5 | 7,080,000.00 |
|
6 | 7,080,000.00 |
|
7 | 7,080,000.00 |
|
8 | 7,080,000.00 |
|
9 | 7,080,000.00 |
|
10 | 7,080,000.00 |
|
11 | 7,080,000.00 |
|
12 | 7,080,000.00 |
|
13 | 7,080,000.00 |
|
14 | 7,080,000.00 |
|
15 | 7,080,000.00 |
|
16 | 7,080,000.00 |
|
17 | 7,080,000.00 |
|
18 | 7,080,000.00 |
|
19 | 7,080,000.00 |
|
20 | 17,080,000.00 |
|
21 | 15,900,000.00 |
|
22 | 14,720,000.00 |
|
23 | 13,540,000.00 |
|
24 | 12,360,000.00 |
|
25 | 11,180,000.00 |
|
|
| 11.800% |
[pic 2]
Year | Cash Flow | Discount factor | Present Value of Future Cash Flows | Time-weighted Duration of Cash Flows |
1 | 7,080,000.00 | 1.1180 | 6,332,737.03 | 0.1055 |
2 | 7,080,000.00 | 1.2499 | 5,664,344.39 | 0.1888 |
3 | 7,080,000.00 | 1.3974 | 5,066,497.67 | 0.2533 |
4 | 7,080,000.00 | 1.5623 | 4,531,751.04 | 0.3021 |
5 | 7,080,000.00 | 1.7467 | 4,053,444.58 | 0.3378 |
6 | 7,080,000.00 | 1.9528 | 3,625,621.27 | 0.3626 |
7 | 7,080,000.00 | 2.1832 | 3,242,952.84 | 0.3783 |
8 | 7,080,000.00 | 2.4408 | 2,900,673.38 | 0.3868 |
9 | 7,080,000.00 | 2.7288 | 2,594,520.02 | 0.3892 |
10 | 7,080,000.00 | 3.0508 | 2,320,679.80 | 0.3868 |
11 | 7,080,000.00 | 3.4108 | 2,075,742.22 | 0.3806 |
12 | 7,080,000.00 | 3.8133 | 1,856,656.73 | 0.3713 |
13 | 7,080,000.00 | 4.2633 | 1,660,694.75 | 0.3598 |
14 | 7,080,000.00 | 4.7663 | 1,485,415.69 | 0.3466 |
15 | 7,080,000.00 | 5.3288 | 1,328,636.58 | 0.3322 |
16 | 7,080,000.00 | 5.9576 | 1,188,404.81 | 0.3169 |
17 | 7,080,000.00 | 6.6606 | 1,062,973.89 | 0.3012 |
18 | 7,080,000.00 | 7.4465 | 950,781.66 | 0.2852 |
19 | 7,080,000.00 | 8.3252 | 850,430.82 | 0.2693 |
20 | 17,080,000.00 | 9.3076 | 1,835,066.45 | 0.6117 |
21 | 15,900,000.00 | 10.4059 | 1,527,985.56 | 0.5348 |
22 | 14,720,000.00 | 11.6337 | 1,265,284.34 | 0.4639 |
23 | 13,540,000.00 | 13.0065 | 1,041,015.47 | 0.3991 |
24 | 12,360,000.00 | 14.5413 | 849,992.68 | 0.3400 |
25 | 11,180,000.00 | 16.2572 | 687,696.34 | 0.2865 |
|
|
| 60000000 | 8.6903 |
|
|
|
|
|
|
|
| Modified Duration= | 8.6903/(1+11.8%)=7.8 |
Year | CF | IRR |
0 | (101,562,500) |
|
1 | 12,000,000 |
|
2 | 12,000,000 |
|
3 | 12,000,000 |
|
4 | 12,000,000 |
|
5 | 12,000,000 |
|
6 | 12,000,000 |
|
7 | 12,000,000 |
|
8 | 12,000,000 |
|
9 | 12,000,000 |
|
10 | 12,000,000 |
|
11 | 12,000,000 |
|
12 | 12,000,000 |
|
13 | 12,000,000 |
|
14 | 12,000,000 |
|
15 | 12,000,000 |
|
16 | 12,000,000 |
|
17 | 12,000,000 |
|
18 | 12,000,000 |
|
19 | 12,000,000 |
|
20 | 12,000,000 |
|
21 | 12,000,000 |
|
22 | 12,000,000 |
|
23 | 12,000,000 |
|
24 | 12,000,000 |
|
25 | 12,000,000 |
|
26 | 12,000,000 |
|
27 | 12,000,000 |
|
28 | 12,000,000 |
|
29 | 12,000,000 |
|
30 | 112,000,000 |
|
|
| 11.81% |
Year | CF |
|
0 | (98,473,500) |
|
1 | 12000000 |
|
2 | 12000000 |
|
3 | 12000000 |
|
4 | 12000000 |
|
5 | 12000000 |
|
6 | 12000000 |
|
7 | 12000000 |
|
8 | 12000000 |
|
9 | 12000000 |
|
10 | 12000000 |
|
11 | 12000000 |
|
12 | 12000000 |
|
13 | 12000000 |
|
14 | 12000000 |
|
15 | 12000000 |
|
16 | 12000000 |
|
17 | 12000000 |
|
18 | 12000000 |
|
19 | 12000000 |
|
20 | 12000000 |
|
21 | 12000000 |
|
22 | 12000000 |
|
23 | 12000000 |
|
24 | 112000000 |
|
|
| 12.20% |
Step 4: CTD (IRR) at Maturity Step 5: CTD Treasury Bond Yield (IRR) at its call date
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