Question
(1) Determine the market value of a bond with a 10% annual coupon, face value $1000, with 8, 5 and 3 years to maturity, using
(1) Determine the market value of a bond with a 10% annual coupon, face value $1000, with 8, 5 and 3 years to maturity, using kd=8%. Show the magic buttons for all three calculations.
(2) A project has a $400,000 initial investment. The cash flows from the projects implementation are 60,000 for the first seven years, and $30,000 for the next seven years. Use i=10% Please calculate:
- The Payback Period figure.
- The discounted payback period.
- The NPV of the project.
(iv) The profitability index of the project.
- The IRR of the project.
Use (iii) above to determine if the project should be accepted.
(3) Find the current stock price in ten years (P10), for a stock that is expected to pay a $5.00 dividend next year, and grow at a constant growth rate of 4%, with a required rate of return of 15%.
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