Q1a: Assume you issue 500 bonds with the following characteristics: 30 year fixed bonds with a principal of $1,000, coupon rate of 7.80%, and YTM of 10.0%. Coupon payments are paid annually.How much money are you able to raise through this bond offering?

Possible Answers: $384,415, $408,193, $396,304

Given the same assumptions from question 1, what will be the price of the bond if the YTM is 7.8%?

Possible Answers: $970, $1,000, $910

Given the same assumptions from question 1, how much money will be raised if the principal amount is changed to $2,000?

(Already know the answer is $792,608, but please include.)

Given the same assumptions from question 1, what is the bond price is YTM drops to 3.0%?

Possible Answers: 970.32, 1,943.23, 1,940.82

Q1b: Assuming your company just paid a dividend of $2.50, your dividend is expected to grow by 5.0% for the first 10 years, your investors have an expected return of 10.0%, and your dividend terminal growth is 3.5%, how much are you able to raise if you issue 1,200,000 shares of stock?

Possible Answers: 56 mill, 53 mill, 55 mill

Assuming all of the assumptions of question 1b, how much money can you raise if you raise your initial dividend amount to $3.50?

(Already know the answer is 75 mill, but please include.)

Assuming all of the assumptions of question 1b, if investors lowered their expected return to 5.5%, what would the new stock price be?

Possible Answers: $100, $155, $148