Calculate the price of a bond with fv

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1) Dmitri Chekov has learned that his great-aunt intends to give him $5,160 each year he is studying at university. Tuition must be paid in advance, so Dmitri Chekov would like to receive his payments at the beginning of each school year. How much will his great-aunt have to invest today at 7 percent, to make the four annual (start-of-year) payments? Assume that Dmitri Chekov will be starting school in five years.

2) Calculate the price of a bond with FV of $1,000, a coupon rate of 14 percent (paid semi-annually), and 7 years to maturity when

A.kb = 16 percent

B.kb = 14 percent

C.kb = 12 percent

3) Sweet Inc. has a patent that will expire in two years. The firm is expected to grow at 9.2 percent for the next two years and dividends will be paid at year end. It just paid a dividend of $1. After two years, the growth rate will decline to 3.2 percent immediately, and the firm will grow at this rate forever. If the required rate of return is 11 percent, value the firm's current share price.

4) Crane Supplies Ltd. currently doesn't pay any dividends but is expected to start paying dividends in five years. The first dividend is expected to be $1 and is expected to grow at 4.7 percent thereafter. The required rate of return for the firm is 9 percent. What is Crane's current stock price?

Reference no: EM132477811

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