Question

*Please explain the answers*

1- .Although you will get a 30-year mortgage, you plan to prepay the loan by making an additional payment each month along with your regular payment. How much extra must you pay each month if you wish to pay off the loan in 20 years? A) $ 24.56 B) $ 54.88 C) $100.80 D) $103.28 E) $106.86 24.

2- J&J Manufacturing just issued a bond with a $1,000 face value and a coupon rate of 8%. If the bond has a life of 20 years, pays annual coupons, and the yield to maturity is 7.5%, what will the bond sell for? a. $ 975 b. $1,020 c. $1,051 d. $1,087 e. $1,162 25.

3-McIver's Meals, Inc. currently pays a $2 annual dividend. Investors believe that dividends will grow at 20% next year, 12% annually for the two years after that, and 6% annually thereafter. Assume the required return is 10%. What is the current market price of the stock? A) $54.90 B) $60.80 C) $66.60 D) $69.30 E) $75.20

4- 10. A bond with a face value of $1,000 has annual coupon payments of $100 and was issued 7 years ago. The bond currently sells for $1,000 and has 8 years remaining to maturity. This bonds must be 10%. I. yield to maturity II. market premium III. coupon rate a. I only b. I and II only c. III only d. I and III only e. I, II and II

Answer 1

COupon rote 80 Coupon amount 20 yd T 7.SI YTm F V Price of bond 11 (6+)T t 1 C=, - - know Ciこ 80 ¥ Ne 10 (PIA, 7.S, 20) + 10752 G8-96 67681 0.194) + 235.41 f1 l0s0, 92 Price of bond i's Optibn c COYYect

Market price of sto cle Sum of pv Of Future dividends 11 Futuve dividends 's 2 (1.2) (1.12) f 2(1.2) (1.12) 2 (1.2) 11 2 201.2) (1.12) (1oC) 2 (.2)(1-122 (.06) DS 2 (1.2) (1-12)2 201.2)C. 12) 201. 2) 11 ClD Ci)3 2(1.2) C1.12 ).06) [1+ 1.06 (1.1)4 1 1 2 C1.2) 201. 2) (1 12) 2(1-2) (1-12)2 CD2 CI.3 2 (1.2 C1-12) 0) i- + 66.60 (OYVert C Option

priu of band today Lets calculats to0 (P/A, 107, 8) + 100 5-3349) t 10000a4665) S33.5 t4665 1000 of the しond Moturity to yield becau se 6ond evalucted pmiu of equals of Market priu (only 6) Correct Option A l 11
question 1 is incomplete as interest rate of mortgage is needed

Middle image is for question 3