User Account

All Pages

What is the impact on the estimated stock price

Assignment Help Financial Management
Reference no: EM131906214

Question 1

A bond has a face value of $1000 with a time to maturity ten years from now. The yield to maturity of the bond now is 10%.
a) What is the price of the bond today, if it pays no coupons?
b) What is the price of the bond if it pays annual coupons of 10%?
c) What is the price today if pays 8% coupon rate semi-annually?

Question 2

a) What is the value today of a $1000 bond, 8% coupon with annual coupon payments if the time to mature is 2 years and YTM is 4%?

Question 3

SalesTech is a constant growth company whose last dividend (D0, which was paid yesterday) was $2.00 and whose dividend is expected to grow indefinitely at a 6% rate. Find the share price.

Question 4
What is the impact on the estimated stock price if g falls to 5% or rises to 7%? If rs changes to 12%% or to 14%?

Question 5.

XYZCo is reinvesting 70% of its earnings in projects that provide a ROE of 9%.

The expected return on similar risky projects is 14% on the stock market. Given the present policy of the firm its year-end dividend is now $3 per share.

a) At what price will the stock sell?

b) What is the present value of the growth opportunities for XYZ Co?

Verified Expert

The assignment relates to financials management. The concept of bond face value, ytm, etc are used in order to calculate the bond price. The question has been elaborated with clear calculations.

Reference no: EM131906214

Questions Cloud

What is the centripetal acceleration : A ball is attached to the end of a 1.6 m string, and it swings in a circle with a constant speed of 6 m/s. What is the centripetal acceleration(m/s2)?
How work impact and influence your own design artistic ideas : Write about what you see in their work, how it impacts and influences your own design artistic ideas. Write about the composition, color, scale, and other aesth
What was the parallel pulling force : A 40 kg sled is pulled horizontally for 470 m (µk = 0.2). If the resultant work is 55 kJ, what was the parallel pulling force?
What approach would work best for different positions : What approach would work best for different positions? Incorporate that into your lesson.
What is the impact on the estimated stock price : What is the value today of a $1000 bond, 8% coupon with annual coupon payments if the time to mature is 2 years and YTM is 4%?
What are the potential and kinetic energies : What are the potential and kinetic energies when it has fallen to a point 4 m from the Earth? (Ignore air resistance and assume that U = 0 at ground level.)
What are the three determinants of behavior : According to Deaux and Major, what are the three determinants of behavior? Give a real life example of each in a one-page writing assignment.
Consider a rutherford scattering experiment : Consider a Rutherford scattering experiment in which 10 MeV a particles are scattered by a gold 19779Au nucleus.
Investigation of Ductility properties in Reinforced Concrete : Prepare Research Plan on Investigation of Ductility properties in Reinforced Concrete. To investigate the ductility of reinforced concrete for high grade steel

Reviews

Write a Review

Financial Management Questions & Answers

  What is the current value of bond

Assume annual coupon payments. What is the current value of this bond?

  Claim a bad debt deduction for the current year

Write a letter to John that contains your advice as to whether he can claim a bad debt deduction for the current year.

  Bond funds and the rest in money market funds

An employee contributes $20,000 to a 401(k) plan each year, and the company matches 25% of this annually. Equity funds are earning 10%, bond funds 4% and money market funds 1%. The employee will retire in 25 years. How much money will he have at reti..

  What is the yield on seven year treasury note

What is the yield on a 7-year Treasury note?

  Depending on how the exchange rate as evolved

Discuss the different possible outcomes (profits/losses) that may arise in 3- month depending on how the exchange rate as evolved.

  Calculate the value of a right if the stock is selling right

Armand Goldman owns 60 shares of East Asia Shipping Company stock and has $750 in cash for investment. The company has offered a rights issue in which purchasing a new stock would require four rights plus $50 in cash. Calculate the value of a right i..

  Two mutually exclusive design projects

The Sloan Corporation is trying to choose between the following two mutually exclusive design projects: Year Cash Flow (I) Cash Flow (II) If the required return is 12 percent, what is the profitability index for both projects?

  Indicate the impact on the cash account

Please indicate the impact on the Cash Account of the following corporate actions a) A dividend payment made from funds from a sale of debt b)Real estate being purchased with short term debt c) Inventory is bought on credit d)Interest on long term de..

  What is the npv of the investment

Dickinson Brothers, Inc., is considering investing in a machine to produce computer keyboards. The price of the machine will be $982,000, and its economic life is five years. The machine will be fully depreciated by the straight-line method. What is ..

  Minimum combined average cost of sales expressed

What would be the minimum combined average cost of sales expressed as percentage necessary to achieve the cost reduction goal?

  What is the payback period for each project

Global Toys, Inc., imposes a payback cutoff of three years for its international investment projects. Assume the company has the following two projects available. Year Cash Flow A Cash Flow B 0 –$ 51,000 –$ 96,000 1 20,000 22,000 2 26,600 27,000 3 22..

  What is the p-e ratio and dividend yield

how much could the investor expect to pay for the shares? What is the P/E Ratio and Dividend Yield?

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd