LO 2 3. Bond P 3. Bond Prices. Lycan, Inc., has 7 percent coupon bonds on the market that have 9 years left to m...

Question

Question

Answer 1

Answer #1

Calculating Bond Price,

Using TVM Calculation,

PV = [FV = 1,000, PMT = 70, N = 9, I = 0.084]

PV = $913.98

Bond Price = $913.98

Calculating Stock Price using Constant Growth Model,

Stock Price = 3.65/(0.11 - 0.051)

Stock Price = $61.86

Answer 2

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