Assume annual coupon payments

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1. Caan Corporation will pay a $2.58 per share dividend next year. The company pledges to increase its dividend by 4 percent per year indefinitely. If you require a return of 12 percent on your investment, how much will you pay for the company’s stock today?

2. What is the yield to call of a 30-year to maturity bond that pays a coupon rate of 14.77 percent per year, has a $1,000 par value, and is currently priced at $1,271? The bond can be called back in 8 years at a call price $1,081. Assume annual coupon payments.

Reference no: EM131825212

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