solve #5 using the info above

2) In 2015, After paying all registration fees to the exchange, and the costs of the IPO, Spahr cosmetics management thought that additional funding is needed. Spahr suggested issuing corporate bonds to mature in 15 years. The company issued the bonds at a par value of a $1000, the total size of the bond issue was $10 million. If Spahr cosmetics bond pays coupon semiannually, and the YTM at issuance is 5%. What is the amount of each coupon payment? a) $25 I/Y= 5%/2=0.025 Nper=15*2=30 PV=1000 FV=1000 PMT? (0.025.30.-1000.1000)-25 b) S 50 c) S 75 d) $ 12.5 3) shortly after the Spahr cosmetics went public, the management announced the following dividends policy. Dividends at year 1=$ 1. Dividends at year 2 = $ 1.5. Dividends at year 3 = $ 1.9. and after that the company is expected to increase its annual dividends by 3% indefinitely. What is the stock price estimate at that time if the required rate of retum was 7%? a) $ 41.12 b) $ 43.73 1/(1+0.07)^1+1.50/(1+0.07)^2+1.90/(1+0.07)^3+1.90(1+0.030.07- 0.03/(1+0.07)^3=43.73 c) S 38.77 d) $23.73 4) at the beginning of 2017. Spahr cosmetics dividends just paid was $ 1.96. Digital Studios expected to grow at a higher rate and the management wanted to share the good days with shareholders. Spahr cosmetics decided to increase dividends by 5% annually. What is the stock price today if the required rate of return is 7%? a) S 98 b) S 29.4 c) $ 102.9 (1.96 1.05)/0.07-0.05)-102.9 d) $ 41.16 5) in 2018, Mr. David "an investor and one of Spahr cosmetics bondholders" wanted to sell his bonds that he acquired back in 2015. What would be the current market price for the bond assuming the following term structure of similar risk bonds? Bonds maturing in YTM 2020 6% a) $778.42 2025 8% b) $ 326.14 c) $ 1000.00 2030 10% d) $ 655.03