Question

1. If expected dividends grow at 8% and the appropriate discount rate is 12%, what is the value of a stock with an expected dividend of $2.33?
2. Solow Corp. has a bond with annual interest payments of $120 maturing in 15 years at a value of $1,000 per bond. The current market price is $960. What will the nominal yield be?
3. A bond with a coupon rate of 7.2%, maturing in 10 years at a value of $1,000 and a current market price of $800, will have a yield to maturity (using the approximation formula) of
4. Buchanan Corp. is refunding $12 million worth of 10% debt. The new bonds will be issued for 8%. The corporation's tax rate is 35%. The call premium is 9%. What is the net cost of the call premium?
5. A bond with a coupon rate of 7.5%, maturing in 10 years at a value of $1,000 and a current market price of $776 will have a current yield of?