(b) (c) (d) Jefferson's recently paid an annual dividend of $1.31 per share. The dividend is...

 

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(b) (c) (d) Jefferson's recently paid an annual dividend of $1.31 per share. The dividend is expected to decrease by 4% each year. What is the share price today if your required return is 16%? of the a (4 marks) Calculate the present value of a $1,000 bond with a 10% coupon, annual payments, and 5 years to maturity with an interest rate of 12%. (3 marks) Describe TWO (2) differences between ordinary shares and bonds. (2 marks) (b) (c) (d) Jefferson's recently paid an annual dividend of $1.31 per share. The dividend is expected to decrease by 4% each year. What is the share price today if your required return is 16%? of the a (4 marks) Calculate the present value of a $1,000 bond with a 10% coupon, annual payments, and 5 years to maturity with an interest rate of 12%. (3 marks) Describe TWO (2) differences between ordinary shares and bonds. (2 marks)

Answer rating: 100% (QA)

b To calculate the share price today we can use the dividend discount model Price D r g Where D is t... View the full answer