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1. Calculate the price of a 6.5 percent coupon bond with 10 years left to maturity and a market interest rate of 8.0 percent. (Assume interest payments are semiannual.) (Do not round intermediate calculations. Round your final answer to 2 decimal places.)
Bond price $
Is this a discount or premium bond?
Discount bond
Premium bond
2. Camper,Inc. is interested in acquiring Baxter Corp. Baxter has 40 million shares outstanding. Its WACC is 9.5% and the risk free rate is 5%. Baxter has $10 million in debt. Baxter's free cash flow is $25 million annually and is expected to grow at a constant rate of 4% per year. Calculate the intrinsic value of Baxter's stock, using the formula Vop = FCF0(1+g)/WACC - g. Based on your calculations, what is the value of Baxter's stock per share?
$11.11
$11.57
$11.82
$14.00
None of the above
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