What is the required return on the stock

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Suppose your company needs to raise $20 million and you want to issue 10-year maturity, zero coupon bonds for this purpose. Current market interest rates for bonds of this risk and maturity are 4.2 percent. The bonds have a par value of $1000. How many of the zeroes would you need to issue to raise the full amount needed?

The next dividend payment by Ech-O-Rama Fun Machines, Inc. is expected to be $4.11 per share. Dividends are expected to grow at a constant rate of 4 percent forever. If the stock currently trades at $67 per share, what is the required return on the stock?

Reference no: EM132171830

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