Question: Please show steps and formulas and not just excel without explanations. 1. Nvidia has just issued some bonds to fund a new graphics card project.

Please show steps and formulas and not just excel without explanations.

1. Nvidia has just issued some bonds to fund a new graphics card project. The bonds have the following characteristics: Semi annual 3% coupon, 10 years to maturity, with a 4% yield. What is the price of this bond today? What if the coupons were annual instead?

2. Apple Inc has just paid a $5 dividend. The company announced that their dividend will grow at stable 5% annual rate. The required rate of return for this company is 16%. What should the stock price be? Hint: Stock price = D1 / (r-g) Stock Price = 5*(1+5%) / (16%-5%) = 47.73

3. Nvidia is planning to pay the following dividends: $2 in 1 year, $6 in 2 years, $7 in 3 years. After that, the dividends are expected to grow at 3% per year, indefinitely. The annual rate of return for this company is 9%. What is the price of the stock? Step 1: 7 / (9%-3%) = 116.67 Step 2: 6 + 116.6667 = 122.67 Step 3: Find NPV: CF1 = 3, CF2 = 122.67, r = 9%. NPV = $105.08 Stock price = $105.08

4. You've just bought a share of stock for $50. You plan to sell it next year. The company expects to grow its dividend by 5%, and pay a $6 dividend next year. If you sell the share next year, what will be your total percentage return? TPR = D1 / P0 + g TPR = 6 / 50 + 5% = 17%

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!