Question

to use the shortcut in this case.] 3. If you purchase a zero coupe se a zero coupon bond from Newman's Postal Delivery today for $492 and it matures at >1,000 in 8 years, what annual rate of return will you earn on I rate of return will you earn on that bond? 4. Vandelay Industries, a latex company, and has historically grown that amount by ustries, a latex company, just paid $3.42 per share in annual dividends i.e. Do = $3.42), rically grown that amount by 5% a year. What is the current value of the stock to an investor who requires an 11% return under each of the follo Dividends continue to grow at the historical rate i.e.5%) growth rate is expected to permanently increase to 7% c) The dividend growth rate is expe vidend growth rate is expected to permanently decrease to 3% is expected to pay a dividend

Answer 1

3 Ciren: Principal P = $492 Time = 8 years Maturity value V= $1000 we have! V = P (I tr)" & V = 492 × [ 1+r]" 1000 = 492 (1+r) 0 - Atr = . 492 ora 0.0927 r = 9.2707

Please post the other question separately. Thanks and good luck:)