Question 2

Part A

You found your dream house. It will cost you $200000 and you will put down $45000 as a down payment. For the rest you get a 30-year 4.0% mortgage. What will be your monthly mortgage payment in $ (assume no early repayment)?

Part B

A 14-year bond with a 5% annual coupon has a yield to maturity of 5%, what is the bond price in $?

Part C

Polariod is expected to pay a $1.25 dividend next year and investors expect that dividend to grow by 3% each year forever. If the required return on the stock investment is 11%, what should be the price of the stock in $ today?

Part D

Find the price of a stock today that is expected to pay dividends of $0.80 per share each year forever. Investors expected return is 12%.