Financial Investments (A) (30 points) a. Carid Company wants to issue new 20-year bonds for some much-needed expansion projects. The company currently has 6.4 percent coupon bonds on the market that sell at a 106.3% of face value, make semiannual payments, and mature in 20 years. What coupon rate should the company set on its new bonds if it wants them to sell at a face value of $1,000? That is, they would sell at neither a discount nor a premium. (6 points) b. Schicchi, Inc., has 9 percent coupon bonds making annual payments with a yield-to-maturity of 7.81 percent. The current yield on these bonds is 8.42 percent. The current yield is the ratio of the annual coupon payment to the bond's current market value. How many years do these bonds have left until they mature? (6 points) c. You are contemplating two different "bond-type" investments that pay $30,000 at maturity in twenty years. Investment A makes no payments for the first six years, then pays $800 every six months over the subsequent eight years, and finally pays $1,000 every six months over the last six years. Investment B makes no payments over its life other than its maturity value. If the required return on each of these investments is 6.4 percent compounded semiannually, what is the current value of Investment A and of Investment B? (6 points) d. Today MariMed Corporation paid a dividend and its stock currently sells for $32.50 per share. The market requires an annual return of 12 percent on the firm's stock. If the company maintains a constant 4 percent growth rate in its annual dividends, what was today's dividend on the stock? (6 points) e. Slow-Gro Company's stock is currently selling for $19.89 per share. The market requires a 15 percent annual return on Slow-Gro's stock and forecasts annual dividends at times 1, 2 and 3 of $1.15, $1.50 and $2.00 per share. The time 4 dividend is predicted to be $3 and grow at a constant annual rate in perpetuity thereafter. What is the constant growth rate implied by the current price? (6 points) Page 1