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Find the price of the bonds based on semiannual analysis

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Question 1: Humana Inc. paid a dividend on common stock of $1.80 last year (Do= $1.80). Over the next years, the dividend is expected to growth at 10%, which is the constant growth rate for the firm. The required return on common stock (Ke) is 12%. Compute the current fair price of the stock (Po). Show work

Question 2: Sara is called in as a financial analyst to appraise the bonds of Humana, Inc. The $1,000 par value bonds have a quoted annual interest rate of 5.4%, which is paid semiannually. The yield to maturity on the bonds is 6.4% annual interest. There are 25 years to maturity

Compute the price of the bonds based on semiannual analysis. Show work

Reference no: EM132563482

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