i am having a hard time understanding these questions, and the deadline is coming up --- 8 questions with a few extensions in each .. really just need answers

1 Problem 10-14 Analyzing bond price changes [LO3] Katie Pairy Fruits Inc. has a $3,000, 22-year bond outstanding with a nominal yield of 15 percent (coupon equals 15% $3,000 = $450 per year). Assume that the current market-required interest rate on similar bonds is now only 12 percent. Use Appendix B and Appendix D for an approximate answer but calculate your final answer using the formula and financial calculator methods. a. Compute the current price of the bond. (Do not round intermediate calculations. Round your final answer to 2 decimal places. Assume interest payments are annual.) $ Current price of the bond b. Find the present value of 3 percent $3,000 (or $90) for 22 years at 12 percent. The $90 is assumed to be an annual payment. Add this value to $3,000. (Do not round intermediate calculations. Round your final answer to 2 decimal places. Assume interest payments are annual.) Present value $ 2 Problem 10-22 Bond value-semiannual analysis [LO3] You are called in as a financial analyst to appraise the bonds of Olsen's Clothing Stores. The $1,000 par value bonds have a quoted annual interest rate of 13 percent, which is paid semiannually. The yield to maturity on the bonds is 12 percent annual interest. There are 20 years to maturity. Use Appendix B andAppendix D for an approximate answer but calculate your final answer using the formula and financial calculator methods. a. Compute the price of the bonds based on semiannual analysis. (Do not round intermediate calculations. Round your final answer to 2 decimal places.) Bond price $ b. With 15 years to maturity, if yield to maturity goes down substantially to 10 percent, what will be the new price of the bonds? (Do not round intermediate calculations. Round your final answer to 2 decimal places.) New bond price $ 3 Problem 10-35 Common stock value based on PV calculations [LO5] Beasley Ball Bearings paid a dividend of $4 last year. The dividend is expected to grow at a constant rate of 6 percent over the next five years. The required rate of return is 17 percent (this will also serve as the discount rate in this problem). Use Appendix B for an approximate answer but calculate your final answer using the formula and financial calculator methods. a. Compute the anticipated value of the dividends for the next four years. (Do not round intermediate calculations. Round your final answers to 2 decimal places.) D1 D2 D3 D4 Anticipated Value $ $ $ $ b. Calculate the present value of each of the anticipated dividends at a discount rate of 17 percent. (Do not round intermediate calculations. Round your final answers to 2 decimal places.) D1 PV of Dividends $ D2 D3 D4 Total $ c. Compute the price of the stock at the end of the fourth year (P4). (Do not round intermediate calculations. Round your final answer to 2 decimal places.) Stock price at Year 4 $ d. Calculate the present value of the year 4 stock price at a discount rate of 17 percent. (Do not round intermediate calculations. Round your final answer to 2 decimal places.) Present value of Year 4 stock price $ e. Compute the current value of the stock. (Do not round intermediate calculations. Round your final answer to 2 decimal places.) $ Current value f. Use the formula given below to show that it will provide approximately the same answer as part e. (Do not round intermediate calculations. Round your final answer to 2 decimal places.) P0 = D1 Ke g $ Current value g. If current EPS were equal to $5.70 and the P/E ratio is 1.2 times higher than the industry average of 6, what would the stock price be? (Do not round intermediate calculations. Round your final answer to 2 decimal places.) $ Stock price h. By what dollar amount is the stock price in part g different from the stock price in part f? (Do not round intermediate calculations. Round your final answer to 2 decimal places.) $ Amount i. In regard to the stock price in part f, indicate which direction it would move if: (1) D1 increases (Click to select) (2) Ke increases (Click to select) (3) g increases (Click to select) 4 Problem 10-8 Interest rate effect [LO3] Refer to Table 10-1, which is based on bonds paying 10 percent interest for 20 years. Assume interest rates in the market (yield to maturity) decline from 12 percent to 8 percent. a. What is the bond price at 12 percent? Bond price $ b. What is the bond price at 8 percent? Bond price $ c. What would be your percentage return on investment if you bought when rates were 12 percent and sold when rates were 8 percent? (Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places. Enter the value as a positive amount.) % Return on investment (Click to select) 5 Problem 10-4 Bond value [LO3] Barry's Steroids Company has $1,000 par value bonds outstanding at 14 percent interest. The bonds will mature in 40 years. If the percent yield to maturity is 10 percent, what percent of the total bond value does the repayment of principal represent? Use Appendix B and Appendix D for an approximate answer but calculate your final answer using the formula and financial calculator methods. (Do not round intermediate calculations. Round your final answer to 2 decimal places. Assume interest payments are annual.) Principal as a percentage of bond price % 6 Problem 10-31 Common stock value based on determining growth rate [LO5] Justin Cement Company has had the following pattern of earnings per share over the last five years: Year 2006 2007 2008 2009 2010 Earnings Per Share $13.00 13.78 14.61 15.49 16.42 The earnings per share have grown at a constant rate (on a rounded basis) and will continue to do so in the future. Dividends represent 40 percent of earnings. a. Project earnings and dividends for the next year (2011). (Round the growth rate to the nearest whole percent. Do not round any other intermediate calculations. Round your answers to 2 decimal places.) Earnings Dividend 2011 $ $ b. If the required rate of return (Ke) is 13 percent, what is the anticipated stock price (P0) at the beginning of 2011? (Round the growth rate to the nearest whole percent. Do not round any other intermediate calculations. Round your answer to 2 decimal places.) Anticipated stock price $ 7 Problem 10-17 Deep discount bonds [LO3] Lance Whittingham IV specializes in buying deep discount bonds. These represent bonds that are trading at well below par value. He has his eye on a bond issued by the Leisure Time Corporation. The $1,000 par value bond pays 7 percent annual interest and has 16 years remaining to maturity. The current yield to maturity on similar bonds is 15 percent. a. What is the current price of the bonds? Use Appendix B and Appendix D for an approximate answer but calculate your final answer using the formula and financial calculator methods. (Do not round intermediate calculations. Round your final answer to 2 decimal places. Assume interest payments are annual.) Current price of the bond $ 8 Problem 11-30 Capital asset pricing model and dividend valuation model [LO3] Eaton Electronic Company's treasurer uses both the capital asset pricing model and the dividend valuation model to compute the cost of common equity (also referred to as the required rate of return for common equity). Assume: m Rf = K = 13% 1.5 = D1 = P0 = G = 8% $.90 $16 9%