What is the price of a bond

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Q1. Consider a firm that has a debt-equity ratio of 1/2. The rate of return for debt is 8% and the rate of return for equity is 12%. The corporate tax rate is 30%. What is the weighted average cost of capital?

Q2. A company has issued preferred stock with an annual dividend of $2.89 that will be paid in perpetuity. The current price of the stock is $25.1. What is the expected rate of return on the preferred stock? Enter your answer as a percentage.

Q3. What is the price of a bond with a coupon rate of 6%, payable annually, a face value of $1000, 8 years to maturity, and a yield to maturity of 5.3%?

Q4. Consider a stock that that has just paid a dividend of $1.33. The dividend is expected to grow at a constant rate of 2.6% every year. The current price of the stock is $42.06. What rate of return are investors expecting?

Reference no: EM133024266

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