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Davcoplansonissuingnewcorporatebonds.Thebondshaveafacevalueof$100,maturein3years,andhaveacouponrateof8%p.a.compoundedquarterly.Couponpaymentsaremadequarterly.Ifyieldsinthemarketare10%p.a.compoundedsemi-annually,howmuchwilleachDavcobondcost? Lavender Group (LVG) Ltd has not paid any dividends previously and expects to pay its first semi-annual dividend of $0.25 cents in one years
- Davcoplansonissuingnewcorporatebonds.Thebondshaveafacevalueof$100,maturein3years,andhaveacouponrateof8%p.a.compoundedquarterly.Couponpaymentsaremadequarterly.Ifyieldsinthemarketare10%p.a.compoundedsemi-annually,howmuchwilleachDavcobondcost?
- Lavender Group (LVG) Ltd has not paid any dividends previously and expects to pay its first semi-annual dividend of $0.25 cents in one years time. LVG expects the earnings per share to grow at 8% p.a. compounded semi-annually for two years from today before reverting to a growth rate of 4% p.a. compounded semi-annually forever. LVG maintains a constant payout ratio. The shareholders of LVG require a return of 14.49% p.a. compounded annually.
- WhatshouldbethepriceofoneLVGsharetoday?
- Suppose you bought shares two years ago for $1.95 and sold them at the current price. What annually compounded rate of return would you have earned over the two years?
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Corporate Finance
Authors: Stephen Ross, Randolph Westerfield, Jeffrey Jaffe, Gordon Roberts, Hamdi Driss
8th Canadian Edition
