What is the present value (aka price) of a 20-year, pure discount bond (zero coupon bond) that
Fantastic news! We've Found the answer you've been seeking!
Question:
Assume IBM is expected to pay a total cash dividend of $3.68 next year and dividends are expected to grow indefinitely by 2.5 percent a year. Assume the required rate of return (i.e. equity holder's opportunity cost of capital) is 9.3 percent. Assuming this is the best information available regarding the future of this firm, what would be the most economically rational value of the stock today (i.e. today's "price")? Answer to 2 decimal places.
Assume a corporation's bond has 18 years remaining until maturity. The coupon interest rate is 8.6% and the bond pays interest semi-annually. Assume bond investors' required rate of return on the bond is 8.3%. What would be the expected market price of this bond. (Assume a $1000 par value.) Answer to 2 decimal places.
Related Book For
Posted Date: