Question
1. one healthcare company is expected to pay a dividend of $3.25 per share next year (t=1) and the dividend is expected to grow at
1. one healthcare company is expected to pay a dividend of $3.25 per share next year (t=1) and the dividend
is expected to grow at a constant rate forever. The stock is currently selling for $42. If the
required rate of return is 10 percent, what is the dividend growth rate?
2. One 6.25 percent coupon bond (par value=$1,000) with 16 years left to maturity is offered for
sale at $1,015.25. What is the yield to maturity of the bond? (Assume interest payments are
semiannual.)
3. the toy company has a current market value of $65 per share with earnings per share of $4.32.
What is the net present value of its growth opportunities if the required rate of return is 8
percent?
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