..ooo AT&T 20:12 ) 83% CORPORATE FINANCE FINAL.. DOC 31 KB LPROBLEMS. years and A.. You have the following information. In 10 in 15 years you will send your two nephews to attend school. The tuition now is $10,000 but will grow at 7% per annum. The school will guarantee the tuition to be the same per year at the time your nephews enroll, but you need to address the rise of the tuition before that time. You want to take care of your father's nursing home in 40 years which costs $40,000 yearly now, but will increase at a rate of 6% yearly. The nursing home will charge an expense which will remain fixed per annum for the duration of the convalescence which will be 20 years. You will retire in 40 years and be in retirement 35 years. You will need S60,000 of income annually. If you can borrow or lend at 5% interest rate, how much should you save per year in the next 40 years, in order to finance the aforementioned? B. We have a preferred stock which pays S 8 per year. when we buy it, the cops is 896.We keep it for 2 years and then sell it. At that time, cops drops to 4%. What is the price we sell it at? If the stock is called after 4 years at 120%, if the cops is 14%, what is the price? C. We have a common stock which has a dividend which grows at 100%for the first 1 year and 200% for the next 1 year. After that it rises more reasonably, but we only know it indirectly. Net profit margin, ATO and financial leverage are.02, 3 and 2 respectively. The dividend payout ratio is.4. The risk free rate, market rate and bheta unlevered is.04,.12 and 2.5 respectively. The tax rate debt and equity are 20%. S4 million and $16 million respectively. First, compute the price of the stock. Second, what are the capital gains yield and dividend yield for the first and the second years? D. A bond sells for $1500 and it pays $100 per annum till its maturity 18 years from now. The firm, however, may call it back after 3 years at $1100. Derive its ytm and its call rate. Compare the ytm and the call rate. Are they reasonable? Why, or why not? Which of the two does an i &Email Save E, Web )per when annum, Wi rates are.14. What is the price we pay for it? pay for ir? e When