Determine the present value of the bond cash flows

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Question 1

The French Thaler and Company's stock has paid dividends of $1.43 over the past 12 months. Its historical growth rate of dividends has been 8 percent, but analysts expect the growth to slow to 5 percent annually for the foreseeable future.

Determine the value of the stock if the required rate of return on stocks of similar risk is 20 percent. (Round answer to 2 decimal places, e.g. 527.52.)

Question 2

The Garcia Company's bonds have a face value of $1,000, will mature in 10 years, and carry a coupon rate of 18.0 percent. Assume interest payments are made semiannually.

Determine the present value of the bond's cash flows if the required rate of return is 18.0 percent. (Round final answer to nearest dollar amount.)

Present value

$Type your answer here 

How would your answer change if the required rate of return is 11.4 percent? (Round final answer to nearest dollar amount.)

Present value

$Type your answer here

Reference no: EM133113367

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