Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Read carefully i posted some of these questions individually and it was not helpful. if you not trying to check them all please leave it
Read carefully i posted some of these questions individually and it was not helpful. if you not trying to check them all please leave it alone I am on my last question for this subscription a period until 7/26 so please help! i also know they are irrelevant to one and other.
13. A limited life company that plans to operate a 30-year project is expected to pay what's described as liquidating dividends (pay same amount of dollars each year for 30 years before it seizes to exist). The annual dividend is estimated at $12.50/ share. If the required rate of return on this company is 15%, how much would a prospective investor be willing to pay for each share of this company? 14. A common stock has just paid a dividend of $2.18/ share. The dividend is expected to grow by 5.62% per year for 25 years. After that the dividends will stay constant in perpetuity. The required rate of return on the stock is 16%. What should the price of the stock be today? * The price of the stock be today: =PV (Dividends) +PV (Terminal Value) - PV=2.30/(0.160.0562)[1(1.0562/1.16)25]=20.03 - Terminal value =2.18(1.0562)25/0.16=53.46 15. A common stock has just paid a dividend of $1.82/ share. The dividend is expected to stay constant for the next 20 years. After that, the dividends are expected to grow by 3.68% per year in perpetuity. The RRR on the stock is 13.82%. What is the value of the stock today? * the value of the stock today: - D after year 20=DX(1+GR)=1.82X(1+3.68%)=1.8870 - Stock Value at the end of year 20=1.8870/(13.82%3.68%)=18.61 =1.82/13.82%X[1((1+13.82%)20)+1.8870X(1+13.82%)20 * =12.32 16. A Six-year, 8% (annual) bond has a YTM of 10%. At what price should the bond be trading? Price of the Bond: - =(1000X8%)X(16 years, 10%)+1000X(6-year, 10%) - =80X[11/((1+0.10)6)/0.10]+1000X(1/(1+0.10)6)=348.80+564=912.80Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started