1. Calculate the current price of a $1,000 par value bond that has a coupon rate of 16 percent, pays coupon interest annually, has 26 years remaining to maturity, and has a current yield to maturity (discount rate) of 5 percent. (Round your answer to 2 decimal places and record without dollar sign or commas).

2. Compute the price of a $ 1,044 par value, 12 percent coupon consol, or perpetual bond (i.e., coupon interest payment is a perpetuity), assuming that the yield to maturity on the bond is 9 percent. (Round your answer to 2 decimal places and record without dollar sign or commas).

3. Compute the price of a $1,000 par value, 10 percent (semi-annual payment) coupon bond with 29 years remaining until maturity assuming that the bond's yield to maturity is 15 percent? (Round your answer to 2 decimal places and record your answer without dollar sign or commas).

4. Pharsalus Inc. just paid a dividend (i.e., D0) of $ 0.74 per share. This dividend is expected to grow at a rate of 6.0 percent per year forever. The appropriate discount rate for Pharsalus's stock is 14.7 percent. What is the price of the stock? (Round your answer to 2 decimal places and record your answer without dollar sign or commas).

5. The stock of Robotic Atlanta Inc. is trading at $ 27.63 per share. In the past, the firm has paid a constant dividend (i.e., g = 0) of $ 4.05 per share and it has just paid an annual dividend (i.e., D0 = 4.05 ). However, the company will announce today new investments that the market did not know about. It is expected that with these new investments, the dividends will grow at 8.5 % forever. Assuming that the discount rate remains the same, what will be the price of the stock after the announcement? (Round your answer to 2 decimal places and record your answer without dollar sign or commas).

Answer rating: 100% (QA)

1 Bond Price Calculation Bond Price C r 1 1 rn F 1 rn where C coupon payment annual coupon rate par ... View the full answer