Estimating current price of stock

Reference no: EM1363836

1) I recently inherited some bonds (face value $100000) from my father, and soon thereafter I became engaged to Tom Mad, a University of Canada marketing graduate. Tom wants Jill to cash in the bonds so the two of them can use the money to live like royalty for two years in the Bahama. The 2 percent annual coupon bonds mature on December 31, 2022, and it is now January 1, 2003. Interest on these bonds is paid annually on December 31 of each year, and new annual coupon bonds with similar risk and maturity are currently yielding 12 percent. If Jill sells her bonds now and puts the proceeds into an account that pays 10 percent compounded annually, what would be the largest equal annual amounts she could withdraw for two years, beginning today (that is, two payments, the first payment today and the second payment one year from today)?

2) I recently took a company public through an initial public offering. I am expanding the business quickly to take advantage of an otherwise unexploited market. Growth for my company is expected to be 40 percent for the first three years and then I expect it to slow down to a constant 15 percent. The most recent dividend (Do) was $0.75. Based on the most recent returns, my company's beta is approximately 1.5. The risk-free rate is 8 percent and the market risk premium is 6 percent. What is the current price of my stock?

Reference no: EM1363836

Questions Cloud

Elucidate each event whether it changes short-run aggregate : Elucidate each event whether it changes short-run aggregate supply, long-run aggregate supply, aggregate demand, or some combination of them.

What was the arrows initial speed : What was the arrow's initial speed. A small sphere with a mass of 2.00×10^-3g and carrying the charge of 4.80×10^-8C hangs from a thread near a very large, charged insulating sheet. The charge density on the sheet is -2.90×10^-9C/m^2 .

Determining single investment amount : Assuming she invests the money her grandmother gives her in a mutual fund that is expected to earn 10%, how much money must she get from Granny if she hopes to meet her early retirement goal?

Explain professional responsibility to complete installation : You are an engineer involved in the development of a financial system. During installations, you discover that this system will make a significant number of people redundant. It is your professional responsibility to complete the installation as..

Estimating current price of stock : I recently took a company public by an initial public offering. I am expanding the business quickly to take advantage of an otherwise unexploited market.

Elucidate how strength of the economy as a whole affected : Elucidate how the strength of the economy as a whole affected the marginal benefits and the marginal costs associated with that decision.

Respondeat superior - liability : Provide an example of a situation in which an assisted-living facility might be liable for the actions of one of its employees for a wrongful act he or she committed

Charcot-marie-tooth disease : Report on Charcot-Marie-Tooth disease at least 250-300 in apa format, citation with references. Explain

Sketch the market for smith house : Smith has been trying to sell his house for six months, but so far, there are no buyers. Sketch the market for Smith's house.

User Account

All Pages