Question

F.E

9.If your stock pays a dividend **D _{0 =} $0.75 at
t = 0**.and will experience a constant growth of 6.4 percent
forever into the future, what should be the price of the stock if
the required return for such stocks is 10.5 percent?

10.What is the price of a 13-year bond paying 9.5% annual coupons with a face (par) value of $1,000 if the market rates for these bonds are 6.1%? Answer to the nearest cent, xxx.xx, and enter without the dollar sign.

Answer #1

9.Current price=D1/(Required return-Growth rate)

=(0.75*1.064)/(0.105-0.064)

**=19.46(Approx)**

10.Annual coupon=1000*9.5%=95

Hence price of bond=Annual coupon*Present value of annuity factor(6.1%,13)+1000*Present value of discounting factor(6.1%,13)

=95*8.80119832+1000*0.463126902

**=1299.24(Approx)**

NOTE:

1.Present value of annuity=Annuity[1-(1+interest rate)^-time period]/rate

=95*[1-(1.061)^-13]/0.061

=95*8.80119832

2.Present value of discounting factor=1000/1.061^13

=1000*0.463126902

Q8
9.If your stock paying annual dividends will pay a dividend
D1 at t=1 of $1.57 and have a growth
rate of 11% between t=1 and t=2, and with a constant
growth rate of 5% thereafter into the future, what should be the
value of the stock at t=0 if the expected rate of return for the
stock is 7%? Notice that in this problem, expected
dividends are given at t = 1, not t = 0! Answer to the
nearest...

F.E
23. In your two-stock portfolio, you invest $25 in stock A and
$75 in stock B. If the beta of stock A is 1.26 and the beta of
stock B is 0.6, your portfolio beta will be: Input your answer two
places to the right of the decimal point as in x.xx
24.What is the price of a 6-year bond paying an annual coupon
rate of 7.9%, but paying it semiannually, per face
(par) value of $1,000 if the...

If your stock paying annual dividends will pay a dividend D1 at
t=1 of $1.93 and have a growth rate of 10% between t=1
and t=2, and with a constant growth rate of 4% thereafter into the
future, what should be the value of the stock at t=0 if the
expected rate of return for the stock is 8%? Notice that
in this problem, expected dividends are given at t = 1, not t = 0!
Answer to the nearest cent as...

25.If your stock paying annual dividends will pay a dividend
D1 at t=1 of $1.06 and have a growth
rate of 11% between t=1 and t=2, and with a constant
growth rate of 5% thereafter into the future, what should be the
value of the stock at t=0 if the expected rate of return for the
stock is 7%? Notice that in this problem, expected
dividends are given at t = 1, not t = 0! Answer to the
nearest cent...

F.E
5. A firm with $3 million EBIT, $0.7 million
depreciation, a tax rate of .4, a capital expenditure of $0.8
million, and an increase in NOWC of $1.1 million will have a free
cash flow of what amount for the year? Please answer in
units of million dollars to the closest tenth of a million
as in $x.x million without entering the dollar sign or the million
word.
6. How much is the present value of an annuity of $3,000...

F.E
3. A firm is considering a project that has the following cash
flow data. What is the project's payback ? Answer in
years to the nearest hundredth as in xx.xx.
Year
0
1
2
3
4
5
Cash flows
-$975
$300
$310
$320
$68
$97
4. If you deposit $25,000 in a saving account paying 2.5% per
year, how much will you have after 5 years if the bank promises
annual compounding? Round your answer to the nearest cent
(xxxxx.xx)...

1. Statue Builders, Inc. took out a loan for $244,564 that has
to be repaid in 9 equal annual installments. The APR on the loan is
6.49 percent. How much of the second payment is interest?
2. What is the price of a 28-year bond paying 7.9 % annual
coupons with a face (par) value of $1,000 if an 28-year bond making
semi-annual payments and paying 7.9 % sells at par? Answer to the
nearest cent, xxx.xx and enter without...

You put aside $100,000 in year t = 0, and let it grow at 6.3%
interest for 5 years. Exactly one year after that you start to
withdraw your money for 3 years in equal amounts until it is
exhausted. How much can you withdraw per year? Answer to the
nearest cent, xxx.xx and enter without a dollar sign.

Consider a six-month European call option on a
non-dividend-paying stock. The stock price is $30, the strike price
is $29, and the continuously compounded risk-free interest rate is
6% per annum. The volatility of the stock price is 20% per annum.
What is price of the call option according to the
Black-Schole-Merton model? Please provide you answer in the unit of
dollar, to the nearest cent, but without the dollar sign (for
example, if your answer is $1.02, write 1.02).

Q4
5.What is the price of a zero-coupon 24-year maturity bond per
face (par) value of $1,000 if the annual market rates for these
bonds are 5.9%? Answer to the nearest cent, xxx.xx and enter
without the dollar sign.
6.A firm's stock has 50% chance of a 8% rate of return and
a 50% chance of a 23% rate of return. What is the
standard deviation of return for this stock?
Answer as a percent return to the
nearest hundredth of a...

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