Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

5,6,7 thank you (12 pts) 5. Charact: Alignme You are considering the purchase of the common stock of Walmart Inc. (WMT). Given the following information,

5,6,7 thank you image text in transcribed
(12 pts) 5. Charact: Alignme You are considering the purchase of the common stock of Walmart Inc. (WMT). Given the following information, explain whether or not if you would buy the stock. Support your conclusions with computations. The current market price of WMT is $144 per share. The target estimated price in two years is $180 per share. The dividend per share in one year is $2.25 and $2.40 in two years. The beta for WMT is.33. The risk free rate is 2.0%. The market risk premium is 6.0%. Determine the value of a share of preferred stock when the dividend rate is 10 percent and the par value is $80. The appropriate discount rate for a stock of this risk level is 12 percent. Why is the price now different from the par value? (10 pts) 6. Spac Bulle (10 pts) 7. Ten years ago, Walmart Inc. (WMT) issued 30-year bonds that had a coupon rate of 8 percent with the interest paid annually. If these bonds are now trading with a 12 percent market required yield, at what price are these bonds now selling? The par value of the bonds is $1,000. Why is the price now different from the par value

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Economics

Authors: Zvi Bodie, Robert C Merton, David Cleeton

2nd Edition

0558785751, 9780558785758

More Books

Students also viewed these Finance questions

Question

Explain the various methods of job evaluation

Answered: 1 week ago

Question

Differentiate Personnel Management and Human Resource Management

Answered: 1 week ago

Question

Describe the functions of Human resource management

Answered: 1 week ago