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give answer with brief work ASAP Required: Answer each of the following questions, documenting your work. (5 points each) 1. A $10,000 face value bond
give answer with brief work ASAP
Required: Answer each of the following questions, documenting your work. (5 points each) 1. A $10,000 face value bond with ten years to maturity and a six percent semiannual coupon currently sells for $8,957.78. What is its yield to maturity expressed both as an APR (Annual Percentage Rate) and as an EAR (Effective Annual Rate)? 2. Suppose that you bought a $1,000 face value, 7% semiannual coupon bond on December 1, 2015, for $1,251.03. The bond's maturity was December 1, 2035. Then on December 1, 2020, after receiving all of the semiannual coupon payments, you sold the bond when the market rate of interest was 5.0% (an APR). What was your holding period yield (HPY) on this investment, expressed as an APR? The holding period yield is, essentially, Internal Rate of Return on your investment. Hint: First, you need to find the bond's market value on December 1, 2020, then use discounted cash flow techniques to find the IRR. 3. Penn Fracking, Inc., expects to receive $90,000 from it fracking operations at the end of next year. Because of the proposed limitations of the "Green New Deal," Penn Fracking expects its receipts to decline by 5% per year until its oil deposits are completely exhausted in twenty years. If the market requires a 23% annual rate of return on such a risky investment, what is Penn Fracking, Inc., worth today? 4. Bosco's common stock is currently selling for $88.35 per share. For the next five years the company will pay a constant annual dividend. In the sixth year, Bosco intends to increase its annual dividend by 4% and continue such annual dividend increases in perpetuity. If investors require an 14% annual rate of return on Bosco's common stock, what is the amount of the constant dividend? 5. Village Farms, Inc., just paid an annual $1.15 per share dividend, which is expected to grow at a "Super-Normal" rate of 6% for the next ten years. After the ten year's dividend, Village Farm's annual dividend growth will be a more sustainable 3.5% in perpetuity. If Village Farm's stockholders require an annual return of 15%, what is the price of Village Farm's stock todayStep by Step Solution
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