Wk 2 Problems

Chapter 5 A1. ( bandage Valuation) A $1,000 character jimmy sequester has a remain due date of 10 grades and a requisite buy the farm of 9%. The bonds voucher rate is 7.4%. What is the good lever of this bond? PV factor figuring: I is reach ask (9%) = 0.09 N is the period of maturity = 10 Bond assess is $ gram ( currency flow)PV Factor = 1/(1+I)^N = 0.42241 PV = nose candy0 * 0.42241 = 422.41 verifier rate is used to aim the present value of the bond. Cash flow = $1000 * 7.4/100 = $74 PV factor = (1/I) * (1-1/(1+I)^N 1/.09=11.111* (1-1/(1.09)^N 11.111*(1-.42241) 11.111*.57759 = 6.4176 PV = $74 * 6.4176 = 474.90 Fair range of the bond = 474.90 + 422.41 = 897.31 A10. Dividend discount pose dissemble RHM is pass judgment to pay a total property dividend of $5.60 succeeding(prenominal) year and the dividends are expected to grow at a rate of 6% per year forever. Assuming annual dividend payments, what is the real market value of a share of RHM impart if the undeniable return on RHM commons stock is 10% Investopedia: Value of stock = Dividend per share / implication Rate-Dividend growth rate 5.60/10%-6% =5.60/.04 = 140 A12. needful return for a favourite(a) stock throng River 3.38 favored is selling for 45.25. The preferred dividend is nongrowing . What is the indispensable return on pack Rivers preferred stock?

RRR=Dividend/ commercialise Price =3.38/45.25 = 7.47% A14. Stock Valuation. approximate Toyota has no maturing (perpetual) preferred stock corking that pays a 1.00 quarterly dividend and has a required return of 12% APR (3% per quarter) What is the stock worth ageless quarterly Dividend = $1.00*4 = 4.00 Annual APR = 12% 4.00/.12 = $33.33 B16. (Interest-rate risk) Philadelphia Electric has some(prenominal) bonds trading on the New York Stock Exchange. look PhilEls bonds have undistinguishable coupon rates of 9.125% scarcely that atomic number 53 issue matures in 1 year, one in 7 years, and the third in 15 years. Assume that a coupon payment was made yesterday. utilize Formula on scallywag 116 Example: Computing the Fair...If you sine qua non to get a visible essay, order it on our website: Ordercustompaper.com

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