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Set Answer the following questions and solve the following problems in the space provided. When you are done, save the file in the format flastname_Week_4_Problem_Set.docx, where flastname is your first initial and your last name, and submit it to the appropriate dropbox. Bonds-1. Interest on a certain issue of bonds is paid annually with a coupon rate of 8%. The bonds have a par value of $1,000. The yield to maturity is 9%. What is the current market piece of these bonds? The bonds will mature in 5 years. Bonds-2. A certain bond has 12 years left to maturity. Interest is paid annually at a coupon rate of 10%. The bonds are currently selling for $850. What is their YTM? Bonds-3. A certain bond pays a semiannual coupon rate at a 10% annual rate. The bond has a par value of $1,000. There are eight years to maturity. The yield to maturity is 9%. What is the current price of the bond? Bonds-4. A particular corporate bond has a par value of $1,000. Coupon payments are $40 and are paid twice a year. Seven years are left on the life of the bond.The YTM is 9%. What is the price of the bond? Bond-5. A given bond has 5 years to maturity. It has a face value of $1,000. It has a YTM of 5% and the coupons are paid semiannually at a 10% annual rate. What does the bond currently sell for? Bond-6. A given bond has five years left to maturity. Interest is paid annually and the annual coupon rate is 9%. The par value of the bond is $1,000. The bond currently sells for $1,000. What is the yield to maturity? Chapter 9 (pages 303-203): 1. Assume Evco, Inc., has a current price of $50 and will pay a $2 dividend in 1 year, and its equity cost of capital is 15%. What price must you expect it to sell for right after paying the dividend in 1 year in order to justify its current price? 5. NoGrowth Corporation currently pays a dividend of $2 per year, and it will continue to pay this dividend forever. What is the price per share if its equity cost of capital is 15% per year? 6. Summit Systems will pay a dividend of $1.50 this year. If you expect Summit's dividend to grow by 6% per year, what is its price per share if its equity cost of capital is 11%? 7. Dorpac Corporation has a dividend yield of 1.5%. Dorpac's equity cost of capital is 8%, and its dividends are expected to grow at a constant rate. a. What is the expected growth rate of Dorpac's dividends? b. What is the expected growth rate of Dorpac's share price? 12. Procter & Gamble will pay an annual dividend of $0.65 1 year from now. Analysts expect this dividend to grow at 12% per year thereafter until the fifth year. After then, growth will level off at 2% per year. According to the dividend-discount model, what is the value of a share of Procter & Gamble stock if the firm's equity cost of capital is 8%?
Williams and Westrich stock is currently selling for $15.25 each share, and the dividend is expected to continue at 92¢ per share. Management expects the stock to grow at 8 percent.
What cash flow must the investment provide at the end of each of the final 4 years, that is, what is X? (can you show me the math of how to get the right answer) Can you put the above scenario in the context of a real world example?
your division is considering two investment projects each of which requires an up-front expenditure of 25 million. you
the ramirez companys last dividend was 1.75. its dividend growth rate is expected to be constant at 25 for 2 years
assume that the risks free rate increases but the mnarket risk premium remains constant. what impact would this have
easter shallow ltd. is a gold mining company operation a single mine. the present price of gold is 300 an ounce it
a warehouse distributor of carpet keeps 6000 yards of deluxe shag carpet in stock during a month. the average demand
Given the information below, compute the expected return, variance, and standard deviation of the following company.
On September 30, 2000, Mattel®, a major toy manufacturer, virtually gave away The Learning Company®, a maker of software for toys, to rid itself of a disastrous acquisition of software publishing firm which actually had cost the firm hundreds of m..
You have a $12,000 portfolio which is invested in stocks A and B, and a risk-free asset. $5,000 is invested in stock A. Stock A has a beta of 1.76 and stock B has a beta of 0.89. How much needs to be invested in stock B if you want a portfolio bet..
calculate the fv of the annuity at the end of the deposit period assuming that the annuity cash flows occur at the end
A supplier grants your firm credit terms of 2/10, net 30. What is the effective annual rate of the discount if the firm purchases $1,850 worth of merchandise?
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