Q1. What is the current market price of a bond that has a face value of $1 million at the end of 2 years and pays semian
Posted: Tue Apr 26, 2022 10:52 am
Q1. What is the current market price of a bond that has a face
value of $1 million at the end of 2 years and pays semiannually
coupons at a rate of 5.2% p.a., if the discount rate is 8% p.a.?
(Show your calculations) (1.5 Marks)
Q2. Facebook paid its common stocks a dividend of $0.77 last
year. The company expects growth to continue at 10% p.a. for the
next 2 years and 5% p.a. thereafter. What is the current price of
the share? common shareholders’ rate of return is 10% p.a.
(Show your calculations) (2 Marks)
Q3. Your company is looking at a project that requires a $50,000
investment. It is expected that the project will generate cash
flows of $15,000 in year 1, $20,000 in year 2, $17,000 in year 3,
and $13,000 in year 4. Using the NPV method, should the project be
undertaken if your shareholders’ required rate of return is 5%?
(Show your calculations) (1.5 Marks)
value of $1 million at the end of 2 years and pays semiannually
coupons at a rate of 5.2% p.a., if the discount rate is 8% p.a.?
(Show your calculations) (1.5 Marks)
Q2. Facebook paid its common stocks a dividend of $0.77 last
year. The company expects growth to continue at 10% p.a. for the
next 2 years and 5% p.a. thereafter. What is the current price of
the share? common shareholders’ rate of return is 10% p.a.
(Show your calculations) (2 Marks)
Q3. Your company is looking at a project that requires a $50,000
investment. It is expected that the project will generate cash
flows of $15,000 in year 1, $20,000 in year 2, $17,000 in year 3,
and $13,000 in year 4. Using the NPV method, should the project be
undertaken if your shareholders’ required rate of return is 5%?
(Show your calculations) (1.5 Marks)