What is the value of bond and preferred stock

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1. What is the “value” of a bond that matures in 14 years with an annual coupon rate of 5% and an investor required rates of return is 7% (assume a $1,000 par value).

2. You purchased a bond that pays $70 per year in interest (dividend), it matures in 15years, you have a required rate of 7%. Calculate the value of the bond.

3. What is the value of a preferred stock, dividend rate of 16%, with a $100 par value, and a 12% required rate of return.

4. Preferred stock pays a dividend of $2.75, and you have a required rate of return of 9%. What are you willing to pay for this stock?

5. Harley Davidson preferred stock is selling for $44.00 per share and pays an annual dividend of $3.60; if you have a required rate of return of 10%, what is the value of the stock and would you buy it?

6. Mouser Corp paid a $3.50 dividend last year, has a constant growth rate of 5%; and your required rate is return is 20%. What is the value of this common stock?

7 & 8

NCR common stock paid $1.32 dividend last year. The dividends are expected to grow at a rate of 8% annually.

a. What is the return of this common stock if the current market price is $23.50

b. If your required rate of return is 10.5% what is the value of the stock to you?

9. Piggly Wiggly’s stock is price at $64.91 and paid a dividend of $1.10 last year, if they are expected to grow at a rate of 4%, what is the expected rate of return for this investment?

 

10. You own 200 shares of Microsoft preferred stock, currently priced at $40, with an annual dividend of $3.40. If you are required, an 8% return – given the current price should you sell? or buy more?

Reference no: EM131190233

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