Question
5. An investment will pay you $500,000 in 3 years. How much is this investment worth in today's dollars if your required rate of return
5. An investment will pay you $500,000 in 3 years. How much is this investment worth in today's dollars if your required rate of return (discount rate) is 10%? 3 Points)
6. Apple, Inc., has 6 percent coupon bonds on the market that have 3 years left to maturity. The bonds make annual payments and have a par value of $1,000. If the YTM on these bonds is 8 percent, what is the current bond price? (3 Points)
7. Michael's, Inc. just paid $3 to its shareholders as the annual dividend. Simultaneously, the company announced that future dividends will be increasing by 6 percent. If you require a rate of return of 10 percent, how much are you willing to pay today to purchase one share of Michael's stock? (3 Points ) SHOW ALL WORK : Formula : Po = Do(1 + g) / (R - g)
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