Author: Anonymous

Palmer Products has outstanding bonds with an annual 6.3 percent coupon.  The bonds have a par value of $1,000 and a price of $759.  The bonds will mature in   13 years. What is the yield to maturity on the bonds?

If D1 = $6, g (which is constant) = 8%, and P0 = $78, what is the stock’s  expected capital gains yield for the coming year?

The Jones Company has decided to undertake a large project. Consequently, there is a  need for additional funds.  The financial manager plans to issue preferred stock with a  perpetual annual dividend of $9.2 per share and a par value of $59.  If the required return  on this stock is currently 12.2 percent, what should be the stock’s market value?

A 16-year bond has a 5 percent annual coupon, a yield to maturity of 4 percent, and a face value of $1,000.  What is the price of the bond?

A share of common stock has just paid a dividend of $5.7.  If the expected long-run  growth rate for this stock is 4.8 percent, and if investors require a 15 percent rate of  return, what is the price of the stock?

Womack Toy Company’s stock is currently trading at $10 per share.  The stock’s dividend  is projected to increase at a constant rate of 2 percent per year.  The required rate of  return on the stock, rs, is 6.8 percent.  What is the expected price of the stock 9 years  from today?

A share of common stock has just paid a dividend of $3.  If the expected long-run  growth rate for this stock is 17.2 percent, and if investors require a 27 percent rate of  return, what is the price of the stock?

The last dividend paid by Klein Company was $1.6.  Klein’s growth rate is expected to be  a constant 6 percent for 2 years, after which dividends are expected to grow at a rate  of 4 percent forever.  Klein’s required rate of return on equity (rs) is 13.9 percent.   What is the current price of Klein’s common stock? 

You intend to purchase a 17-year, $1,000 face value bond that pays interest of $48 every every 6 months.  If your nominal annual required rate of return is 9.7 percent with semiannual compounding, how much should you be willing to pay for this bond?

McKenna Motors is expected to pay a $5 per-share dividend at the end of the year  (D1 = $5).  The stock sells for $18 per share and its required rate of return is 30.8  percent.  The dividend is expected to grow at a constant rate, g, forever.  What is the  growth rate, g, for this stock?