Lowell, Inc. bonds have a 5% coupon rate with semiannual coupon payments. They have 15 years to maturity and a par value of $1,000. Compute the value of Lowells bonds if investors' required rate of return is 7%.

Answers:

A) $1,156.22

B) $816.08

C) $1,047.28

D) $984.44

Radiant stock paid a dividend of $3 last year. Based on its recent performance and future outlook, investors are expecting Radiant's earnings and dividends to decline at a constant rate of 3% per year. If Radiant's cost of equity is 10%, the value of radiant stock is closest to:

Answers:

A) $10.42

B) $7.63

C) $31.48

D) $22.38