A bond pays coupon payment of $100 per year and continue forever, required rate of return...
A bond pays coupon payment of $100 per year and continue forever, required rate of return is 10% and the growth rate of cash flow is 5%. What’s the value of this bond? You should provide all the calculation process and formulas.
Homework Answers
Value of Bond = Perpetual Cfs / [r - g]
= $100 / [0.10 - 0.05] = $100 / 0.05 = $2,000
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A bond pays coupon payment of $100 per year and continue
forever, required rate of return...
Variable Name options are: "Bond' semiannual coupon payment" "bonds annual coupon payment" "bondholders required return" For...
Variable Name options are:
"Bond' semiannual coupon payment" "bonds annual coupon payment"
"bondholders required return"
For example, assume Noah wants to earn a return of 15.75% and is offered the opportunity to purchase a $1,000 par value bond that pays a 18.00% coupon rate (distributed semiannually) with three years remaining to maturity. The following formula can be used to compute the bond's intrinsic value Intrinsic Value zGL t 7. 07 Complete the following table by identifying the appropriate corresponding variables...
formula + answer (no tables) 5. The stock pays 8% coupon constantly forever, your required rate...
formula + answer (no tables)
5. The stock pays 8% coupon constantly forever, your required rate of return is 6%, how much would you pay to buy it? What is the expected price after one year? (8 PTS) 6. You believe that the stock who is going to pay $4 dividend next year and will grow then at a constant rate forever. If it sells today at $60, what should be its dividend growth rate? (8 PTS)
Bond valuation Years to maturity Par value of bond Coupon rate Frequency interest paid per year...
Bond valuation Years to maturity Par value of bond Coupon rate Frequency interest paid per year Effective annual rate 25 $1,000.00 9.00% 10.04% Calculation of periodic rate: Nominal annual rate Periodic rate Formulas #N/A #N/A 1 Formulas #N/A 0.00% 3 Calculation of bond price: 4 Number of periods 15 Interest rate per period 16 Coupon payment per period 17 Par value of bond 18 Price of bond #N/A $1,000.00 #N/A Video Excel Online Structured Activity: Bond valuation You are considering...
Bond Valuation Time to Maturity (Years) Coupon Rate Required Return Frequency Bond Valuations This bond has...
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A $1,000 par value bond’s coupon rate is 4 percent per year but it pays coupon...
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Variable Name options are:
"Bond' semiannual coupon payment" "bonds annual coupon payment"
"bondholders required return"
For example, assume Noah wants to earn a return of 15.75% and is offered the opportunity to purchase a $1,000 par value bond that pays a 18.00% coupon rate (distributed semiannually) with three years remaining to maturity. The following formula can be used to compute the bond's intrinsic value Intrinsic Value zGL t 7. 07 Complete the following table by identifying the appropriate corresponding variables...
formula + answer (no tables)
5. The stock pays 8% coupon constantly forever, your required rate of return is 6%, how much would you pay to buy it? What is the expected price after one year? (8 PTS) 6. You believe that the stock who is going to pay $4 dividend next year and will grow then at a constant rate forever. If it sells today at $60, what should be its dividend growth rate? (8 PTS)
Bond valuation Years to maturity Par value of bond Coupon rate Frequency interest paid per year Effective annual rate 25 $1,000.00 9.00% 10.04% Calculation of periodic rate: Nominal annual rate Periodic rate Formulas #N/A #N/A 1 Formulas #N/A 0.00% 3 Calculation of bond price: 4 Number of periods 15 Interest rate per period 16 Coupon payment per period 17 Par value of bond 18 Price of bond #N/A $1,000.00 #N/A Video Excel Online Structured Activity: Bond valuation You are considering...
Bond Valuation Time to Maturity (Years) Coupon Rate Required Return Frequency Bond Valuations This bond has 20 years to maturity Coupon rate Current required return 9.00 % Semi Annual interest payments 8.00% Face Value Value cach year $1,000.00 Par value 20 Find the value of this bond for each of the 18 years to maturity listed 16 14 Why does the value of the bond continue to increase over time? 12 10 Is this bond currently selling for a premium...
1. What is the yield to maturity of a bond that pays 12% coupon rate with semi-annual coupon payments, has a par value of $1,000, matures in 9 years, and is currently selling for $897? a) 14.05% b) 11.90% c) 7.03% d) 12.97% 2. a company just paid a dividend of $1.25, and those dividends are expected to grow at a constant rate of 5% forever. If the required return of the investors is 11%, what is the stock price...
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