1. Madsen Motors\'s bonds have 23 years remaining to maturity. Interest is paid
ID: 2792640 • Letter: 1
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1. Madsen Motors's bonds have 23 years remaining to maturity. Interest is paid annually; they have a $1,000 par value; the coupon interest rate s 996; and the yield to maturity is 1 196. What is the bond's current market price? A bond has a $1,000 par value, 12 years to maturity, and an 8% annual coupon. It sells for $980. What is its yield to maturity? 2, 3. Nesmith Corporation's outstanding bonds have a $1,000 par value, an 8% semiannual coupon, 14 years to maturity, and an 11% yield to maturity. What is the bond's price? Harrimon Industries bonds have 6 years left to maturity. Interest is paid annually, and the bonds have a $1,000 par value and a coupon rate of 10%. What is the yield to maturity at a current market price of $8652 What is the yield to maturity at a current market price of $1,166 4. 5. Weston Corporation just paid a dividend of $1.00 a share (i.e., Do-$1.00). The dividend is expected to grow 12% a year for the next 3 years and the at 596 a year thereafter. What is the expected dividend per share for each of the next 5 years? 6. Tresnan Brothers is expected to pay a $1,800 per share dividend at the end of the year (i. DI-$1.80). The dividend is expected to grow at a constant rate of 4% a year. The requir rate of return, r,, on the stock is 10%. What is the stock's current value per share? ed Scampini Technologies is expected to generate $25 million in free cash flow next year, and FCF is expected to grow at a constant rate of 4% per year indefinitely. Scampini has no debt or preferred stock, and its cost of capital is 10%. If Scampini has 40 million shares of stock outstanding, what is the stock's value per share? 7.Explanation / Answer
Madsen Motors Year to maturity =n 23 1) Coupon Rate 9.0% Coupon Amount=(PMT)=($1000*7%) 90 Fair value 1000 Yield to maturity= i 11% Present Value in excel(=PV(I,n,PMT,FV)) PV(11%,23,90,1000) Present Value ($834.67) 2) Coupon rate= 8.0% Years to maturity=nper 12 Years Future value=FV $1,000 Present Value=PV -980 Coupon Payment=PMT $80 RATE(nper,Pmt,PV,FV,Type) RATE(12,80,-980,1000,0) 8.27% Nesmith Corpn Year to maturity =n=(14*2) 28 3) Coupon Rate=(8%/2) 4.0% Coupon Amount=(PMT)=($1000*7%) 40 Fair value 1000 Yield to maturity= i=(11%/2) 5.5% Present Value in excel(=PV(I,n,PMT,FV)) PV(5.5%,28,40,1000) Present Value ($788.18) Harrimon Industries 4) When current market price=$865 Coupon rate= 10.0% Years to maturity=nper 6 Years Future value=FV $1,000 Present Value=PV -865 Coupon Payment=PMT $100 RATE(nper,Pmt,PV,FV,Type) RATE(6,100,-865,1000,0) 13.42% When current market price=$1166 Coupon rate= 10.0% Years to maturity=nper 6 Years Future value=FV $1,000 Present Value=PV -1166 Coupon Payment=PMT $100 RATE(nper,Pmt,PV,FV,Type) RATE(6,100,-1166,1000,0) 6.56%
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