1. A bond that matures in fourteen years with a maturity value of $1,000 pays a coupon of 6.5% paid annually. The bond’s YTM is 11.25%. What is the market price of the bond?

2. Mycor’s 15-year, zero-coupon bond is currently selling for $821.75. This bond’s maturity value is $1,000. What is the bond’s yield to maturity (YTM)?

3. Eight years ago, Mycor issued a 25-year bond with a $1,000 face value and a 8.125% coupon rate of interest (paid semiannually). If investors require a return equal to 10% to invest in similar bonds, what is the current market value of Mycor’s bond?

4. Sixteen years ago, Mycor issued a 25-year bond with a $1,000 maturity value and a 7.125% coupon rate of interest. Interest is paid quarterly. The bond is currently selling for $916.88. (a) What is the bond’s yield to maturity? (b) If the bond can be called in 3 years for a redemption price of $1,075, what is the bond’s yield to call?

5. Mycor’s preferred stock, which has a par value equal to $88.67 per share, pays an annual dividend equal to 6.875% of the par value. If investors require a 18% return to purchase Mycor’s preferred stock, what is the stock’s market value?

6. Since it started business 5 years ago, Mycor has paid a constant $0.75 per share dividend to its common stockholders. In three years and every year thereafter, the company plans to increase the dividend at a constant rate equal to 5% per year. If investors require a 12% rate of return to purchase Mycor’s common stock, what is the market value of Mycor’s common stock?

7. Mycor is expected to grow at a constant rate of 4.75% and its dividend yield is currently 7.75%. If the market value of Mycor’s stock is currently $55.20 what is the amount of the dividend Mycor paid at the end of the year?

8. 15 points: Mycor’s financial statements show that its interest expense was $65,700, its marginal tax rate was 40%, and its invested capital was $675,000. If its average cost of funds is 15%, and Mycor’s economic value added (EVA) was $75,000, what was Mycor’s net income?

9. 15 points: Joan purchased Mycor’s stock twelve years ago at $20.75 per share. Joan bought 300 shares at that time. Mycor paid a dividend of $1.25 per share and the end of each year for three years after Joan bought her shares and then increased the dividend payment 5% per year after that. Mycor’s stock is currently trading for $74.88 per share. If Joan sells her shares of Mycor what would be her average annual return on her investment and her total capital gain?

10. 15 points: An investor is currently earning a 15% return on Mycor’s stock at its current share price as the investor knows in three years Mycor will begin increasing its current dividend 6% per year. Mycor stock currently sells for $75.65 per share. What is the current dividend Mycor is paying?

Answer rating: 100% (QA)

1 The market price of the bond would be 1000 2 The bonds yi... View the full answer