Valuing bond and common stocks

Reference no: EM1338739

1. Baron Inc. bonds have a face value of $1000 and mature in 10 years. The coupon rate is 18%, and coupons are paid semiannually. The yield is 12% compound semiannually. Find the bond's price.

2. Danish Inc. has cumulative preferred stock that pays an annual dividend of $4.50. If the current price is $37.50, what is the required return?

3. Alpo expects to pay dividends of $3.54 at the end of year 1, $4.18 at the end of year 2, and $4.93 at the end of year 3. After year 3, dividends are expected to grow at a constant rate of 8% each year. The required return is 18%. What is Alpo's current share price?

4. XXC expects earnings per share to be $6.00 next period. The retention rate is 60% and the return on equity (ROE) is 20%. The required return is 18%. What is XXC's stock price?

Note- Interest is compounded annually and payments are at year end unless stated otherwise.

Reference no: EM1338739

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