Compute what value would place on the stock

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Question A. The 12-percent-coupon-rate bonds of the PEL Refrigerator Company have exactly 15 years remaining to maturity. The current market value of one of these Rs. 1,000 par value bonds is Rs 700. Interest is paid semiannually. Khizer places a nominal annual required rate of return of 14 percent on these bonds. What rupees intrinsic value should Khizer place on one of these bonds assuming semiannual discounting?

Question B. Al Noor Products Corporation currently pays a dividend of $3 per share, and this dividend is expected to grow at a 14 percent annual rate for three years, and then at a 9 percent rate for the next three years, after which it is expected to grow at a 5 percent rate forever. What value would you place on the stock if an 18 percent rate of return was required by you?

Reference no: EM132569193

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