Question: help please only people who can do this question if u cant do it do dont reply please To be handed in on Thursday, June
To be handed in on Thursday, June 20, 2019 1. ABC corporation has issued $1,000 par value bonds with a coupon rate 5 % interest, annually. Assume that today's required rate of return on bonds is 7%. How much would these bonds sell for today if it takes 9 years to mature? (4 marks) 2. Creed's corporation paid a $3 dividend at the end of last year and is expected to pay a cash dividend every year from now to infinity. Each year the dividends are expected to grow at a rate of 6 %. What is the value of Creed's common stock if its required return is 10 %? ( 4 marks) Hint: (1) Because the $3.00 dividend was paid last year (D.), we must compute the next dividend to be received, that is, D, where DI-Do (1+g) (2) Now, calculate the common stock 's vale as: 3. Simplicity Printers is considering with a required rate of return of 15%. The cash flows for the project are shown in the table below. Cash Flows Year -$100,000 0 $65,000 $55,000 2 -$20,000 3 $60,000 4 Compute the Net Present Value (NPV) of this project (4 marks) Year 0 represents the initial expense, while years 1 to 4 show the income to be received. Hint
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