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Camden's Antiques, Inc. just added a whole new line of furniture to his product line. Camden expects this addition to result in record high dividends of $3.15 and $4.15 in the next two years. After that, he thinks his growth will level off at its usual 3% rate. The rate expected in the marketplace for investments similar to Camden's is 5%.

What is the current value of a share of Camden's? ______________

What will the value of a share be in year two (P2)? ______________

What will the value of a share be in year thirteen (P13)? ______________

Max is thinking about buying a $1,000 bond that has a 5% semiannual coupon and 12 years to maturity. The expected rate in the marketplace for investments similar to this is 7.5%.

Will this bond be a premium or discount bond? __________________

What is the present value of the coupon stream? ________________

What is the present value of the face value? ____________________

What is the total value of the bond? ___________________________

If the bond is priced at 98, should Max buy or not buy? ___________

Use the tables for the following problem.

Maya wants to buy her first home in six years. Maya plans to save $4,000 per year out of her annual bonus at the end of the year. Her savings account, which is compounded annually, earns an annual rate of 6%. How much will Maya have for her down payment?

Table ________________

Row _________________

Column (rate) _________

Factor _______________

Future Value ___________

Reference no: EM132532007

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