What is the value java stock

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1) What is the price of a semiannual $1,000 par value bond with four years left until maturity that pays a coupon of 3.75% and is yielding 5.25%? What would it be yielding if the price decreased to $973.47? Assume semiannual compounding for both.

2) Coffee shop chain Java the Hut just paid a $2.70 dividend. There are two possible pricing scenarios:

a. Scenario 1: You expect the stock will grow at 7% per year forever. Assuming 13% required return, what is the value of Java's stock?

b. Scenario 2: For the next two years, you think it will grow by 12% a year, getting it back to its pre-recession level. After that, you expect it to grow at 5% a year forever. Assuming 13% required return, what is the value Java's stock?

Reference no: EM132124429

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