# INDY Cars LTD

MINI CASE STUDY ASIGNMENT: INDY CARS LTD.

Building on its reputation for manufacturing no-thrills, efficient and affordable automobiles, the Indian car manufacturer Indy Cars Ltd. Is ready to launch an international marketing campaign, specifically targeting low- to medium-income customers in Asia and Europe. In preparation for the expected demand increase, a new production facility will be added in the state of Andhra Pradesh near Hyderabad to complement the already existing plants in Mumbai and New Delhi.
The company’s CFO, Raja Jain, is planning to raise the required funds of Indian Rupees (Rs.) 10 billion (\$222.4 million) in the form of a 20-year, annual coupon paying corporate bond. The company’s current debt rating with Standard & Poor’s is “A” with a positive outlook, indicating the likelihood of a rating upgrade to AA in the near future. In that case, the market’s required rate of return could drop by as much as 75 basis points from 6.80 per cent to 6.05 per cent. Mr Jain is wondering if the bond should be issued at a premium or a discount and if the company should offer a fixed or floating rate or, instead of making explicit interest payments, issue a zero-coupon bond instead. Each bond will have a normal value of Rs. 1,000. The intended issue date is 1 July 2021. Your job is to:

Don't use plagiarized sources. Get Your Custom Essay on
INDY Cars LTD
From as low as \$9/Page

QUESTIONS
1. Advice Mr Jain on the impact of the following set of bond features and characteristics on the cost of debt: sinking fund, asset-backing, seniority, conversion feature, call provision, and a put provision.
2. Compute the expected issue price based on a required rate of return of 6.8 per cent for:
a. a fixed annual interest payment of Rs. 64 per bond.
b. a fixed annual interest rate of Rs. 72 per bond.
c. Does your answer to a and b change if semi-annual interest payments of Rs. 32 and Rs. 36 respectively are made? Is so, why?
d. d.A zero-coupon bond
3. Recompute your results of 2 a,b and c assuming an upgrade in the company’s credit rating and determine the impact on the expected issue price.

4. Explain to Mr Jain if investors would prefer a floating rate bond and why? Make sure to reference the citations using the APA writing style for the essay.

Order NOW For A 10% Discount!
Pages (550 words)
Approximate price: -

Plagiarism Free Papers

Thehomeworkwritings.com’s team of writers write all papers from scratch. We deliver 100% original, unique papers. That’s what makes us the best custom homework writing service

Free Revisions

We provide unlimited free revisions to all customers and on all papers. Try The Homework Writings today for the best custom homework writing service and experience in the industry.

Title-page

Thehomeworkwritings.com gives clients title pages free of charge. Your only job is to fill out our order form. We will handle the rest.

Bibliography

As the leading essay writing service, we never submit any paper without a reference/bibliography page. We do this free of charge too.

Originality & Security

At Thehomeworkwritings.com, we take great pride in delivering only high-quality 100% original papers to all our clients. We also never share any of our clients’ information with third parties. Your data is safe with us.

No other custom homework writing service has a friendly, always available customer support team to respond to clients like us.

Try it now!

## Calculate the price of your order

We'll send you the first draft for approval by at
Total price:
\$0.00

How it works?

Fill in the order form and provide all details of your assignment.

Proceed with the payment

Choose the payment system that suits you most.

Why outsource our services

We have the best customer support team for your essay writing needs.

## Flexible Pricing

You won’t find any other custom homework writing service with pricing as flexible and affordable as ours.

We provide a direct line of communication with our writers for the best writing experience.

Paper Submission

As the leading custom homework writing service, we take deadlines very seriously. You will have your paper submitted on time without any delays.

Customer Feedback

We truly value your feedback, good or bad, and always use your feedback to help us provide you with an even better custom homework writing service