# ABC Enterprises’ stock is expected to pay a dividend of \$0.3 per share.

24 / 01 / 2019 Assignments

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## ABC Enterprises’ stock is expected to pay a dividend of \$0.3 per share.

ABC Enterprises’ stock is expected to pay a dividend of \$0.3 per share. The dividend is projected to increase at a constant rate of 5.9% per year. The required rate of return on the stock is 19.6%. What is the stock’s expected price 3 years from today (i.e. solve for P3)?Assume that you wish to purchase a 19-year bond that has a maturity value of \$1,000 and a coupon interest rate of 8%, paid semiannually. If you require a 4.79% rate of return on this investment (YTM), what is the maximum price that you should be willing to pay for this bond? That is, solve for PV.ABC Inc., is expected to pay an annual dividend of \$4.4 per share next year. The required return is 17.5 percent and the growth rate is 4.6 percent. What is the expected value of this stock five years from now?ABC wants to issue 8-year, zero coupon bonds that yield 7.61 percent. What price should they charge for these bonds if they have a par value of \$1,000? That is, solve for PV. Assume annual compounding.Hint: zero coupon bonds means PMT = 0The common stock of Connor, Inc., is selling for \$77 a share and has a dividend yield of 3.9 percent. What is the dividend amount?The 5.16 percent, \$1,000 face value bonds of Tim McKnight, Inc., are currently selling at \$1,015.32. What is the current yield?Stealers Wheel Software has 9.99% coupon bonds on the market with nine years to maturity. The bonds make semi-annual payments and currently sell for 104.68% of par. What is the current yield?ABC just paid a dividend of D0 = \$2.8. Analysts expect the company’s dividend to grow by 32% this year, by 24% in Year 2, and at a constant rate of 7% in Year 3 and thereafter. The required return on this stock is 13%. What is the best estimate of the stockâs current market value?The 13.34 percent coupon bonds of the Peterson Co. are selling for \$1,125.43. The bonds mature in 5 years and pay interest semi-annually. These bonds have current yield of _____ percent.ABCâs last dividend paid was \$1.7, its required return is 18.6%, its growth rate is 7%, and its growth rate is expected to be constant in the future. What is Sorenson’s expected stock price in 7 years, i.e., what is P7?The common stock of Wetmore Industries is valued at \$24.9 a share. The company increases their dividend by 3.7 percent annually and expects their next dividend to be \$5.3. What is the required rate of return on this stock?ABC has issued a bond with the following characteristics:Par: \$1,000; Time to maturity: 19 years; Coupon rate: 5%;Assume semi-annual coupon payments. Calculate the price of this bond if the YTM is 5.16%

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