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1) A beach house in Didim now costs 950,000. Inflation is expected to cause this price to increase at approximately 10% per year over the
1) A beach house in Didim now costs 950,000. Inflation is expected to cause this price to increase at approximately 10% per year over the next 30 years before Lara and her husband retires. How large an equal annual end-of-year deposit must be made into an account paying an annual rate of interest of 14 % in order to buy the beach house upon retirement? 2) To expand its business, Laris Company would like to issue a bond with par value of $1,000, coupon rate of 15%, and maturity of 20 years from now. What is the value of the bond if the required rate of return is 12%? (Interest is paid annually) 3) Calculate the value of a share of common stock of Specter Inc. whose most recent dividend was $3 and is expected to grow at 5% per year for the next 3 years, after which the dividend growth rate will decrease to 3% per year indefinitely. Assume 8% required rate of return
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