Value of builtrite preferred stock

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1. Builtrite bonds have the following: 5 ½% coupon, 16 years until maturity, $1000 par and are currently selling at $1032. If you want to make an 5% return, what would you be willing to pay for the bond?

  • $1028
  • $1036
  • $1042
  • $1054

2. Builtrite sold 12 year, $1000 par value, zero coupon bonds yielding 4%. What did they sell for?

  • $643
  • $676
  • $625
  • $658

3. Builtrite preferred stock has a 5% coupon based on a par value of $60 a share. Currently, investors require a 4% return. What is the value of Builtrite's preferred stock?

  • $60
  • $66
  • $75
  • $90

4. Given the following information, calculate the current value of the stock: current dividend is $3.00, projected super normal growth for three years at 20%, growth rate after year 3 should remain constant at 9% and you want to earn a 16% annual return. What should you pay for the stock?

  • $68.62
  • $56.89
  • $72.82
  • $61.33

Reference no: EM13844489

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