Question #3

a) Hillard Manufacturing Inc. issued 10-year maturity coupon bonds when the market interest rate was 10%. If the coupon rate is 9% and the Par Value (Face Value) is $1,000, at what price will the bonds sell?

N I/Y PV PMT FV

b) Thomas Brothers paid last dividends of $0.50 per share and the dividend is expected to grow at a constant rate of 7% a year. The required rate of return on the stock, r_{s ,} is 15%. What is the stocks current value per share?

c) Arnot Internationals bonds have a current market price of $900. The bonds have an 12% annual coupon payment and 15 years left until maturity. What is the bonds yield to maturity?

N I/Y PV PMT FV