What is current stock price according to the gordon model

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1. The Cougar Corporation has issued 20-year semi-annual coupon bonds with a face value of $1,000. If the annual coupon rate is 10% and the current yield to?maturity is 12%, what is the firm's current price per bond?

2. Endicott Enterprises Inc. has issued 30-year semiannual coupon bonds with a face value of $1,000. If the annual coupon rate is 14% and the current yield to maturity is 8%, what is the firm's current price per bond?

3. RC Inc. just issued zero-coupon bonds with a par value of $1,000. If the bond has a maturity of 15 years and a yield to maturity of 10%, what is the current?price of the bond assuming semi-annual compounding?

4. You want to invest in a stock that pays $6.00 annual cash dividends for the next five years. At the end of the five years, you will sell the stock for $30.00.?If you want to earn 10% on this investment, what is a fair price for this stock if you buy it today?

5. Walker Laboratories, Inc. pays a $1.37 dividend every quarter and will maintain this policy forever. What price should you pay for one share of common stock if you want an annual return of 12.5% on your investment?

6. You buy a stock for which you expect to receive an annual dividend of $2.10 for the fifteen years that you plan on holding it. After 15 years, you expect to sell?the stock for 32.25. What is the present value of a share for this company if you want a 10% return?

7. The Belgium Bike Company just paid an annual dividend of $1.12. If you expect a constant dividend growth rate of 4% and have a required rate of return of 13%, what is the current stock price according to the Gordon model?

Reference no: EM13333073

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