1. Trump Co. has $1000 face value (maturity value) bonds outstanding with a coupon rate of...
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1. Trump Co. has $1000 face value (maturity value) bonds outstanding with a coupon rate of 10% and semi annual payments. The bonds mature in 25 years. Compute the current price if the interest rate on similar bonds is 6% 2. Greene corporation has preferred shares that have a dividend of $2.50 payable quarterly. If the required rate of return is 8% compounded quarterly. a. Find the price of the shares. b. The following year the interest rate increases to 10% compounding quarterly what is the gain or loss on the shares. 3. Benning Company has a current semi annual dividend of $.50 and a constant growth rate of 5%. a Compute the current value of the shares if Ke is 8% b. The following year growth increases to 6% and rates rise making the Ke 10% find the new value of the shares. 4. WEED Corp is expected to have three years of exceptional growth with the current dividend of $.10 annually growing at 10% per year. After that time, analysts expect growth to level off at 5%. Find the value of the shares today if Ke is 15%. 1. Trump Co. has $1000 face value (maturity value) bonds outstanding with a coupon rate of 10% and semi annual payments. The bonds mature in 25 years. Compute the current price if the interest rate on similar bonds is 6% 2. Greene corporation has preferred shares that have a dividend of $2.50 payable quarterly. If the required rate of return is 8% compounded quarterly. a. Find the price of the shares. b. The following year the interest rate increases to 10% compounding quarterly what is the gain or loss on the shares. 3. Benning Company has a current semi annual dividend of $.50 and a constant growth rate of 5%. a Compute the current value of the shares if Ke is 8% b. The following year growth increases to 6% and rates rise making the Ke 10% find the new value of the shares. 4. WEED Corp is expected to have three years of exceptional growth with the current dividend of $.10 annually growing at 10% per year. After that time, analysts expect growth to level off at 5%. Find the value of the shares today if Ke is 15%.
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Answer rating: 100% (QA)
SOLUTION 1 The price of the bond can be calculated using the formula Price C 1 rnnt F 1 rnnt where C is the coupon payment F is the face value r is th... View the full answer
Related Book For
Foundations of Financial Management
ISBN: 978-1259024979
10th Canadian edition
Authors: Stanley Block, Geoffrey Hirt, Bartley Danielsen, Doug Short, Michael Perretta
Posted Date:
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