Hello,

Please assist me on the following attached finance problem set and include an excel spreadsheet of the breakdown and calculations for each derive answer.

Thank you!

Finance Problem Set 1. Consider two bonds, a 3-year bond paying an annual coupon of 5% and a 10year bond also with an annual coupon of 5%. Both currently sell at face value. Now suppose interest rate rises to 10%. a) What is the new price of the 3-year bond? b) What is the new price of the 10-year bond? C) Do you conclude that long-term or short-term bonds are more sensitive to a change in interest rates? (10 points) 2. McDonald's 5 year 2.625% coupon bond is trading at 102.7. What is this bond's yield to maturity? McDonald's common stock has a dividend yield of 2.81%. Why is its dividend yield higher than its 5 year bond yield? (10 points) 3. New Tech Inc. has come out with an improved product, and the firm project 20% growth rate on its dividend for 4 years. By then, other firms will have copycat technology, competition will drive down profit margins and the sustainable growth rate will fall to 5%. The most recent dividend was DIV0= $1 per share. If the discount rate is 10%, what would be the company's stock price based on dividend discount model? (10 points) 4. American Water is a regulated public utility, and its expected dividend growth rate is 8% for the indefinite future. Its last dividend was $5 per share; the stock is sold for $60 per share just after the dividend was paid. What is the company's cost of equity? (10 points) 5. Here is some information about XYZ Inc.: Beta of common stock = 1.2 Treasury bill rate = 0.25% Market risk premium = 4% Yield to maturity on long-term debt = 6% Book value of equity = $440 million Market value of equity = $880 million Long-term debt outstanding = $880 million Corporate tax rate = 35% What is the company's WACC? (10 points) 6. Financial analyst often use earnings multiple, book-value multiple, EBITDA multiple and price to evaluate common stocks. Please explain how each multiple is used under different circumstances. (10 points) 7. A corporation has the following data: Recent share price $31.25 Share outstanding $30 million Market value of debt $115 million Cash and Equivalent $47.6 million Other financial investment $247 million Net income $119.4 million Interest expense $5.8 million Depreciation $6.9 million Amortization $2.3 million Taxes $85.9 million What is the corporation's EV/EBITDA? (10 points) 8. On Jan 10th 2000, AOL announced to acquire Time Warner for $182 billion. When the deal was announced, the combined company is worth $350 billion. Now split again, AOL is worth $3 billion while Time Warner is worth about $140 billion 15 years later. Please explain why mega merger often ended up in financial disaster. Why is the promised synergies never realized? (10 points) 9. The ABC Co. earned $10 million before interest and taxes on revenue of $60 million last year. Investment in fixed capital was $12 million, and depreciation was $8 million. Working capital investment was $3 million. The company expects sales, EBIT, investment in fixed and working capital, depreciation to grow at 12% per year for the next five years. After that, the growth will decline to a stable 4% per year, and investments in fixed assets will offset depreciation. The company's WACC is 8%. What is a fair value of the company? [Cash flows (5 points), terminal value in Year 6 (5 points), final value calculation (10 points)]