Determining the dividend payout ratio

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1. Suppose a 10 year, $1000 bond with a 7% coupon rate and semiannual coupons is trading for the price of 917.61. a) What is the bond yield to maturity   b)  if the bond's ytm changes to 8% APR What will the bond price be?

2. Suppose a 5 year $1000 bond with the annual coupons has the price of $880 and yield to maturity is 6%. What is the bonds coupon rate?

3. PV(0.12510,14,-35,20,-1000) find rate. Put in excel and find.

4. Assume Great clips have a stock price of $63 and will pay a 1.95 dividend in one year; its equity cost of capital is 17%. What must Great clips stock sell for immediately after it pays the dividend in one year to justify its current price?

5. Colgate-Palmolive Company has just paid an annual dividend of $1.02. Analysts are predicting a (n) 10.9% per year growth rate in earnings over the next five years. After that, Colgate's earnings are expected to grow at the current industry average of 6.3%per year. If Colgate's equity  cost of capital is 9.4% per year and its dividend payout ratio remains constant, what price does the dividend discount model predict Colgate should sell for?

Reference no: EM131097088

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