question 15

2. Bond, Inc. bonds -an ave an 80% couponand pay interest semi-annually. Currently, the bonds are priced at 977.04. The bonds mature in nine years. What is their yield to maturity? Bond, Inc. has just paid a dividend of $4.00 per share. The dividend is expected to increase by 20% for the year ahead and then grow at 10 for the subsequent two years before stabilizing to a perpetual 4% pa. what is the stock worth today if the discount rate is 12%? Suppose you buy the stock and sell it one year from now, videndyield and capital gan? Suppose you buy the so kands llito eye rfrom ow, ( s theexpected 1 Capital Budgeting FV 14. What is the IRR of a Baker, Inc. investment that r Hottest Pr 8 Popula Fua2 initial outlay of $82,500 and produces an aftr 0 x cash flow of $28,920 per year for 4 years? 15 Baker, Inc. uses specialized ovens to bake its bread. osts $160,000 and lasts about 4 years before it needs to be replaced. Ovens have no net resale value at the end of their useful lives and can be depreciated er tax operating cost per oven is $20,000, What is straight line over their useful lives. The annual aft d I pa ? equivalent annual cash flow (EAC) ofan oven if the required rate ofreturns10 million in equipment. The system will be used for 3 years until a new plant that meets emission standards becomes operational when it will be sold for $400,000. According to the tax authority, the control system should be depreciated straight line over 4 years. What is the cash flow consequence of the sale of the equipment at the end of the project life if the corporate tax rate is 21%? 16. Baker, Inc. is required to invest in an emissions control system that requires an initial investment of $1.2 17. Baker Project Gamma requires an up-front investment of $70,000. The project is expected to generate after tax cash flows of $22,500; $27,500; $32,500; and $37,500 over the four years of its expected life. What is the payback period and discounted payback period for the project if the company's required rate of return is 12% for nriects of this type