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Neutral Insert Delete Format Merge & Center $~ % Conditional Format Good Formatting ~ as Table Alignment Number Styles Cells Font A B C D G H Save 2 Question 1 Your good friend is looking to buy a bond that pays semi annual interest. The par value is $1,000 and the coupon 3 rate is 4% per annum. Your friend plans to hold the bond to its maturity, which is 10 years from now. If her required rate of return is 3%, what is the most you recommend your friend pay for the bond? (round to nearest cent) tos... 5 3 points ast ... ber... 6 7 Question 2 Waldo is thinking about purchasing an investment that will provide him with cash flow of $2,500 each year for the first 4 years and [on... $4,700 in the 5th year. His required rate of return is 7%. What is the most he should pay for this investment? he ... $11,819 Hint: Use part of the 5th year cash flow as part of the annuity stream and the remainder of the 5th year cash flow as 10 3 points the future value.) he ... 11 12 Question 3 A preferred stock has a par value of $110 and pays an annual dividend of 5% of par. ver... 13 If similar investments have an annual rate of return of 3%, what is the current value of this preferred stock. (round to nearest cent) ast.. 14 $183.33 emb... 15 3 points 16 the .. 17 Question 4 North by Northwest Airlines paid a dividend of $1.67 for the current year. They plan to increase the dividend by 8% next year, 18 after which there are no further increases planned. If the required rate of return is 10%, what is the value of a share of the airline's stock 12P8.. 19 $18.04 (round to nearest cent) ne ... 20 3 points 21 the.. 22 Question 5 Gillette's stock currently trades at $116.57 per share. They plan to pay a dividend of $1.50 next year, and investors 23 expect the dividend growth rate to remain constant thereafter. If the required rate of return is 9%, what is the dividend 24 7.7% growth rate investors expect? (Round to one decimal place.) 25 3 points (Hint: When the constant-growth formula is solved for the growth variable, it is g = - D/P + 5) 26 Close Directions Questions to Comple ything O 8 0

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