1) (Bond valuation) NationalSteel's 15-year, $1,000 par value bonds pay 11 percent interest annually. The market price of the bonds is $775, and your required rate of return is 16 percent.

a. Compute thebond's expected rate of return.

b. Determine the value of the bond toyou, given your required rate of return.

c. Should you purchase thebond?

2) (Yield to maturity) A(n) 8-year bond for Rusk Corporation has a market price of

$1,025 and a par value of $1,000. If the bond has an annual interest rate of percent, but pays interestsemiannually, what is thebond's yield tomaturity?

a. Thebond's yield to maturity is __%

3) (Preferred stock valuation) You are considering an investment in one of two preferredstocks, TCF Capital or TAYC Capital Trust. TCF Capital pays an annual dividend of $4.74, while TAYC Capital pays an annual dividend of $4.99. If your required return is 12 percent, what value would you assign to thestocks?

a. The value of the TCF Capital preferred stock is $___ per share. (Round to the nearest cent.)

4) (Common stock valuation) Dalton Inc. has a return on equity of 11.1 percent and retains 58 percent of its earnings for reinvestment purposes. It recently paid a dividend of $3.25 and the stock is currently selling for $39

a. What is the growth rate for DaltonInc.?

b. What is the expected return forDalton's stock?

c. If you require a 13 percentreturn, should you invest in thefirm?

5) (Common stock valuation) Herrera Motor Inc. paid a $3.75 dividend last year. At a constant growth rate of 5 percent, what is the value of the common stock if the investors require a rate of return of 21 percent?

a. The value of the Herrera Motor common stock is $____. (Round to the nearestcent.)

6) (Preferred stockholder expected return) You own 200 shares of Dalton Resources preferredstock, which currently sells for $ 48.78 per share and pays annual dividends of $ 3.25 per share.

a. What is your expectedreturn?

b. If you require a return of 8 percent, given the currentprice, should you sell or buy morestock?

7) (Common stockholder expected return) Alyward& Bram common stock currently sells for $ 24.50 per share. Thecompany's executives anticipate a constant growth rate of 8.6 percent and anend-of-year dividend of $ 1.75.

a. What is your expected rate ofreturn?

b. If you require a return of 17 percent, should you purchase thestock?

a) If you buy the stock for $ 24.50, your expected rate of return is ____%. (Round to two decimalplaces.)