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3.1.2.1.1 1.1.2 3 1 4. 5 16:07H:80910:10 1:11:1:12:1 13 14 15 16 Alternative 2 -- -700 DUO SUV SUU (Ans. Alternative 1) Q14) What is the coupon rate of a semi-annual bond with a yield to maturity of 10%, $1,000 face value, and 20 years to maturity, if it currently sells for $914.20? (Ans. 9%) Q15) The $1,000 face value ABC bond has a coupon rate of 6%, with interest paid semi-annually, and matures in 5 years. If the bond is priced to yield 8%, what is the bond's value today? (Ans. $918.89) Q16) Assume that a young start-up company will pay no dividends for the next 5 years. At year 6 it will pay a dividend of $2.00 per share which will grow by 5% a year for 2 years and then will grow at a rate of 3% indefinitely. If the required return is 10%, how much will you pay for a share today? (Ans. $18.36) Q17) Suppose that a company has 2 million shares outstanding and plans to pay a dividend of $3 a share next year. Assuming that investors expect a steady dividend growth rate of 8% a year and require a return of 12%, what is the value of the company? (Ans. $150 mil.) Q18) Consider a project that produces the following cash flows: Cash Flows, Dollars Co Ci 5000 4,000 C2 -11,000 i2