Reference no: EM132393568

1. Still growing is a mature firm, growing at a constant rate of 3.5% per year. Its net income last year was $10.5 million and it has 2.0 million shares outstanding. Still growing has no debt and all income is paid out as dividends to its shareholders. Assuming a 14% cost of capital, what should be the current stock price

2 . Mary Mansion just bought a $750,000 house. She put down 20% and took out a 30-year loan to finance the balance of the house. It is payable monthly, and carriers an interest rate of 6.50% per year. Assuming the house does not appreciate and is still worth $750,000, what % of the house does she own after 10 years?

3 Beach or Bust, LLC is thinking of investing in a new reservation system that will cost $5.3 million today. It is expected to generate annual cash flows of $1.6 million in 2020, growing 10% in 2021, 8% in 2022, and 7% per year for each of the next 2 years. If the company's cost of capital is 15%, what is the net present value? 

4. What is the IRR of the new reservation system?

5. What is the compounded annual growth rate of the cash flows generated from the new reservation system in question #1, starting in 2020?

6. Do you recommend that Beach or Bust, LCC purchase the new reservation system? Why or why not? 

7.Today is March 15, 2019. Beach or Bust, LLC issues a bond with a coupon rate of 4.3% and matures in five years. Its par value is $1,000. The bond pays quarterly interest payments. Calculate the yield to maturity of the bond if the price of the bond is 101.6% of par.