SWH Corporation issued bonds on January 1, 2004. The bonds had a coupon rate of 4.5%, with interest paid semiannually. The face value of the bonds is $1,000 and the bonds mature on January 1, 2014. What is the intrinsic value (to the nearest dollar) of an SWH Corporation bond on January 1, 2008 to an investor with a required return of 6%?

Select one:

a. $888

b. $916

c. $947

d. $925

Which of the following statements concerning stock valuation is most correct?

Select one:

a. The free cash method can only be used if a company does not pay dividends.

b. The dividend valuation approach is more accurate than the free cash flow approach.

c. The free cash flow method will result in a higher valuation than the dividend valuation method because cash flows are higher than dividends.

d. When using the free cash flow method, interest-bearing debt must be subtracted from firm value to determine the stock value.