Project #16100 - Finance

App Store Co. issued 14-year bonds one year ago at a coupon rate of 7.9 percent. The bonds make semiannual payments.

 

Required:

If the YTM on these bonds is 5.6 percent, what is the current bond price? (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).)

 

Crossfade Co. issued 14-year bonds two years ago at a coupon rate of 9.2 percent. The bonds make semiannual payments.

  

Required:

If these bonds currently sell for 107 percent of par value, what is the YTM? (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).)

 

The stock price of Webber Co. is $54.40. Investors require a return of 14 percent on similar stocks.

 

Required:

If the company plans to pay a dividend of $3.85 next year, what growth rate is expected for the company’s stock price?(Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).)

 

Gontier Corporation stock currently sells for $64.88 per share. The market requires a return of 11 percent on the firm’s stock.

Required:

If the company maintains a constant 4.5 percent growth rate in dividends, what was the most recent dividend per share paid on the stock? (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).)

Most corporations pay quarterly dividends on their common stock rather than annual dividends. Barring any unusual circumstances during the year, the board raises, lowers, or maintains the current dividend once a year and then pays this dividend out in equal quarterly installments to its shareholders.

 

Required:

 

(a)

Suppose a company currently pays an annual dividend of $6.60 on its common stock in a single annual installment, and management plans on raising this dividend by 7.00 percent per year indefinitely. If the required return on this stock is 11 percent, what is the current share price? (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).)

 

  Current share price $  

 

(b)

Now suppose the company in (a) actually pays its annual dividend in equal quarterly installments; thus, the company has just paid a dividend of $1.65 per share, as it has for the previous three quarters. What is your value for the current share price now? (Hint: Find the equivalent annual end-of-year dividend for each year.) (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).)

 

  Current share price $  

 

 

Required:

If the YTM on these bonds is 10.1 percent, what is the current bond price? (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).)

 

 


 

Required:

If the bond currently sells for $1,152.27, what is its YTM? (Do not round intermediate calculations.Round your answer to 2 decimal places (e.g., 32.16).)

 


 

Required:

What must the coupon rate be on Merton’s bonds? (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16). )

 


 

Required:

If the YTM on these bonds is 5.4 percent, what is the current bond price? (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).)

 

 

To calculate the number of years until maturity, assume that it is currently May 2013.


 

Rate Maturity
Mo/Yr
Bid Asked Chg Ask
Yld
??           May 25      103.5449      103.6327      +.3287         2.309      
6.202        May 30      104.4939      104.6396      +.4281         ??        
6.158        May 40      ??         ??         +.5392         4.011      



 

Required:

In the above table, find the Treasury bond that matures in May 2025. What is the coupon rate for this bond? (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).)

 

 

 

To calculate the number of years until maturity, assume that it is currently January 15, 2013.


 

Company
(Ticker)
Coupon Maturity Last
Price
Last
Yield
EST $ Vol
(000’s)
  Xenon, Inc. (XIC) 6.000    Jan 15, 2026      94.243        ??        57,368      
  Kenny Corp. (KCC) 7.180    Jan 15, 2023      ??           6.14       48,947      
  Williams Co. (WICO) ??      Jan 15, 2032      94.795        6.96       43,808      


 

Required:

What is the coupon rate for the Williams Co. bond? (Do not round intermediate calculations.Round your answer to 2 decimal places (e.g., 32.16).)

 

 


 

Requirement 1:

What is the current yield for bond P? (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).)


 

  Current yield %  


 

Requirement 2:

What is the current yield for bond D? (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).)


 

  Current yield %  


 

Requirement 3:

If interest rates remain unchanged, what is the expected capital gains yield over the next year for bond P? (Do not round intermediate calculations.Negative amount should be indicated by a minus sign. Round your answer to 2 decimal places (e.g., 32.16).)


 

  Capital gains yield %  


 

Requirement 4:

If interest rates remain unchanged, what is the expected capital gains yield over the next year for bond D? (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).)


 

  Capital gains yield %  

 


 

Requirement 1:

What is the current price? (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).)


 

  Current price $  


 

Requirement 2:

What will the price be in five years and in fourteen years? (Do not round intermediate calculations. Round your answers to 2 decimal places (e.g., 32.16).)


 

   
  Five years $  
  Fourteen years $  

 

 

Gontier Corporation stock currently sells for $65.08 per share. The market requires a return of 10 percent on the firm’s stock.

Required:

If the company maintains a constant 4.5 percent growth rate in dividends, what was the most recent dividend per share paid on the stock? (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Subject Mathematics
Due By (Pacific Time) 11/04/2013 12:00 am
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