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Can you please help with these Finance questions, please see attached sheet. PLEASE INCLUDE all formulas used and show your work! Module 2 Extra Extra
Can you please help with these Finance questions, please see attached sheet. PLEASE INCLUDE all formulas used and show your work!
Module 2 Extra Extra Practice 1. ABC has a 5% coupon bond outstanding. The remaining maturity is 10 years. The market yield on this type of bond is 6%. Find a fair price. (926.40) 2. If the ABC bond has a price of 1050, what is the yield? (4.37%) 3. Last year Trumpco paid a 2.30 per share dividend. The beta is 2.1, the market is expected to earn 10%, and the risk free rate is 3%. If dividends remain at 2.30 per year forever, what is a fair price? (12.99) 4. What if Trumpco's dividends grow at 6% per year forever? (20.84) 5. Find the dividend yield and capital gains yield for the stock in number 4. (.117 and .06) 6. What if Trumpco's dividends grow at 4% for one year, than at 8% forever after that? (24.66) 7. Drew Brees can generate 4 in Eps per year forever. The fair return is 12%. They can retain 50% of earnings and invest in a project that will earn 14%. Find the value of assets in place. Find the value of the growth opportunity. Should Drew buy it? (33.33, 6.67, yes) 8. The spot price is 50. The exercise price on a one year call is 48. The standard deviation of the spot is 25%. The risk free rate is 3%. Find the intrinsic value, time value and premium for this call. (2, 4.52, 6.52) 9. The spot price is 70. The exercise price on a one year call is 72. The risk free rate is 3%. Find the price of the call if there is equal probability that stock price will grow to 75 or fall to 68. (1.71) 10. XYZ uses a capital structure that is 40% debt. The interest rate on this debt is 8%. The tax rate is 40%. If XYZ has a beta of 1.5 and the market is expected to earn 12% and the risk free rate is 2%, what is XYZ's WACC? (.1212)Step by Step Solution
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