Find out values of following bonds. YTM is 7%, and Time to maturity is 10 years...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Find out values of following bonds. YTM is 7%, and Time to maturity is 10 years (10 points) Bond A: 3.5% of coupon paid semiannually, Face value = $1,000,000 Bond B: 0% of coupon, Face value = $5,000,000 Bond C: 10% of coupon paid annually, Face value = $3,500,000 (2) Find out values of following stocks. The discount rate is 8% (10 points) Stock A: recently paid dividend = $ 3 per share, dividend growth rate as 0% Stock B: recently paid dividend = S 6 per share, dividend growth rate as 4% Stock C: EPS = $ 15, benchmark PER = 3 (3) Firm A has recently paid dividend of $ 14 per share. It is expected that firm A will grow by 15% for next six years and 5% thereafter. It is also known that firm A's beta is 1.5, risk free rate is 1%, and market risk premium is 6%. Estimate the stock value of firm A. (10 points) Find out values of following bonds. YTM is 7%, and Time to maturity is 10 years (10 points) Bond A: 3.5% of coupon paid semiannually, Face value = $1,000,000 Bond B: 0% of coupon, Face value = $5,000,000 Bond C: 10% of coupon paid annually, Face value = $3,500,000 (2) Find out values of following stocks. The discount rate is 8% (10 points) Stock A: recently paid dividend = $ 3 per share, dividend growth rate as 0% Stock B: recently paid dividend = S 6 per share, dividend growth rate as 4% Stock C: EPS = $ 15, benchmark PER = 3 (3) Firm A has recently paid dividend of $ 14 per share. It is expected that firm A will grow by 15% for next six years and 5% thereafter. It is also known that firm A's beta is 1.5, risk free rate is 1%, and market risk premium is 6%. Estimate the stock value of firm A. (10 points)
Expert Answer:
Answer rating: 100% (QA)
1 Bond A Coupon Rate 35 of 1000000 35000 semiannually Yield to Maturity YTM 7 Time to Maturity 10 years 20 periods since coupon paid semiannually To calculate the bond value we need to discount the fu... View the full answer
Related Book For
Fundamentals of Corporate Finance
ISBN: 978-1260153590
12th edition
Authors: Stephen M. Ross, Randolph W Westerfield, Robert R. Dockson, Bradford D Jordan
Posted Date:
Students also viewed these finance questions
-
Firm A has recently paid dividend of $ 14 per share . It is expected that firm A will grow by 15% for next six years and 5% thereafter. It is also known that firm A's beta is 1.5, risk free rate is...
-
Managing Scope Changes Case Study Scope changes on a project can occur regardless of how well the project is planned or executed. Scope changes can be the result of something that was omitted during...
-
KYC's stock price can go up by 15 percent every year, or down by 10 percent. Both outcomes are equally likely. The risk free rate is 5 percent, and the current stock price of KYC is 100. (a) Price a...
-
We consider and simulate the supply chain under a wholesale price contract. As mentioned, we use a retail price of $10, a unit production cost of $2.50, and a (monthly) demand that is normally...
-
Approximately what magnitude force, FM, must the extensor muscle in the upper arm exert on the lower arm to hold a 7.3-kg shot put (Fig. 9-64)? Assume the lower arm has a mass of 2.8 kg and its CG is...
-
Determine the magnitude and direction of the resultant of the two forces shown knowing that P = 6 kips and Q = 7 kips. 15 30 20
-
On November 15, 2010, Chandlers Department Store purchased $5,100 of inventory on account from one of its suppliers. The terms were 3/15, n/45, FOB shipping point. On November 18 Chandlers Department...
-
Petal Providers Corporation, described in Problem 5, is interested in estimating its sustainable sales growth rate. Last year, revenues were $1 million; net profit was $50,000; investment in assets...
-
Convert the integrals to polar coordinates and evaluate them. (1) Lo (2) .3 L S 9-x2 So = (x + y) dx dy .2 0 4-y (x + y) dx dy
-
Repeat problem 6, but close the position on September 20. Use the spreadsheet to find the profits for the possible stock prices on September 20. Generate a graph and use it to identify the...
-
A rope attached at both ends has consecutive standing wave modes for which the approximate distances between two adjacent nodes are 181 mm and 166 mm, respectively. (a) What is the length of the...
-
Share some additional information about operating systems. Look around the Internet for a complete comprehensive review of the most current versions of macOS, Windows, Ubuntu, iOS, or Android.The...
-
The price of a box of ramen noodles is $0.60 and the price of a pound of pasta is $0.75. What is the relative price of a box of ramen noodles? The relative price of a box of ramen noodles is
-
If the market risk premium is 8% and a stock has a risk premium of 4% what must be the stock's Beta given the expected reward to risk ratio in the economy?(Please write your answer in decimal format,...
-
Discuss your operating system(s). Feel free to share the tools mentioned in the description section, your computer settings, and update settings (Win11/10 (Lifewire),Links to an external site. macOS...
-
You are the director at Dello Inc., which has been appointed as auditors of Diestel ( Pty ) Ltd ( Diestel ) , a cold beverage wholesale supplier servicing the Gauteng area. You were as a designated...
-
ABC's Year 2015 Income statement per GAAP reported a net income before tax P6,000,000. The following are included in the above reported income: dividend income (exempt from income tax) P500,000 ...
-
Can partitioned join be used for r r.A s? Explain your answer
-
The most recent financial statements for Alexander Co. are shown here: Assets and costs are proportional to sales. The company maintains a constant 40 percent dividend payout ratio and a constant...
-
In Problem 10, suppose you want only $1,500 total in dividends the first year. What will your homemade dividend be in two years? Data from problem 10 You own 1,000 shares of stock in Avondale...
-
Consider the following simplified financial statements for the Wims Corporation (assuming no income taxes): The company has predicted a sales increase of 15 percent. It has predicted that every item...
-
Using data from a random sample of elementary schools, a researcher regresses average test scores on the fraction of students who qualify for reduced-price meals. The regression indicates a negative...
-
In the demand curve model of Equation (12.3), is \(\ln \left(P_{i}^{\text {butter }} ight)\) positively or negatively correlated with the error, \(u_{i}\) ? If \(\beta_{1}\) is estimated by OLS,...
-
In the study of cigarette demand in this chapter, suppose we used as an instrument the number of trees per capita in the state. Is this instrument relevant? Is it exogenous? Is it a valid instrument?
Study smarter with the SolutionInn App