What is the present value of growth opportunities

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1. What is the price of a Verismo Company’s bond that has a 7.50 percent coupon and a face value of $1,000, pays interest semiannually, and has 15 years to maturity, if the required rate of return is 5 percent?

$1051.87.

$1,134.21.

$1,261.63.

$997.25.

$950.08.

2. Next year's earnings are estimated to be $3. The company plans to reinvest 25% of its earnings at 20%. If the cost of equity is 12%, what is the present value of growth opportunities?

$6.14

$8.14

$7.14

$12.12

Reference no: EM132005959

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