Reference no: EM13826273
1. Lifestyle Pty Ltd, has issued a 3-year bond with a face value of $1000 that pays a coupon of 6.10 per cent. Coupon payments are made semiannually. Given the market rate of interest of 5.80 per cent, what is the market value of the bond?
2. You are interested in investing in a $1,000 5-year bond that pays 7.8 per cent coupon with interest to be received semiannually. Your required rate of return is 8.4 per cent. What is the most you would be willing to pay for this bond?
3. Suppose you borrow $10,000 to buy a car and pay it off in equal annual instalments over five years with an annual interest rate of 8%. Draw an amortization schedule for this loan.
4. Road Knight Pty Ltd has seen no growth for the past several years and expects the trend to continue. The company last paid a dividend of $3.56. If you require a rate of return of 13 per cent, what is the current share price?
5. Mordialloc Optical Pty Ltd declared a dividend of $2.15 yesterday. The company is expected to grow at a steady rate of 5 per cent for the next several years. If shares such as these require a rate of return of 15 per cent, what should be the market value of this share?
6. Exego Pty Ltd is expected to pay a dividend of $2.25 next year. The forecast for the share price a year from now is $37.50. If the required rate of return is 14 per cent, what is the current share price? Assume constant growth.
7. Cofield Pty Ltd is expected to grow at a constant rate of 7 per cent. If the company's next dividend is $1.15 and its current price is $22.35, what is the required rate of return on this share?
8. Between the book value of assets and the book value of debt defines the book value of equity. If you check Yahoo finance, you could see that Apple (ticker: AAPL) reports a book value of equity of $112 billion as of August 27, 2015.
a) On Yahoo finance, find Apple's market value of equity which is reported as market capitalization or market cap.
b) How Apple's market value of equity compares to its book value? Does it make sense?
c) Download daily prices starting June 1, 2015 through August 21, 2015 for AAPL stock and compute the average traded volume and average closing price.
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