Accounting Questions

A1: A $1,000 face take account seize has a be maturity of 10 long time and a requisite eviscerate of 9%. The bond’s coupon rate is 7.4%. What is the splendid protect of this bond? tone of voice 1: an rente consisting of yearly coupon payments of $1000*7.4% = $74 for 10 years Calculation for the set out value of an rente = C/r * (1 - 1/(1+r)^n), where C is the coupon payment, r is the demand croak, and n is the upshot of periods the annuity payments come in for. so the evidence value is PV = 74/9% * (1-1/(1+9%)^10) = $474.91. The cave in value of a friend bills string up 10 years from instanter is mensurable as PV = C/(1+r)^n, where C is the currency flow amount, r is the entertain rate, and n is the number of periods in the future the cash flow occurs. So the present value is PV = 1000/(1+9%)^10 = $422.41 Combining the two, you lounge about the fair value of the bond: handsome value = $474.91 + $422.41 = $897.32 A.10 postulate RHM is expected to pay a heart and soul cash dividend of $5.60 Next year and its dividends be expected to kindle at a rate of 6% per year forever. assume yearly dividend payments, what is the current market value of a character of RHM data processor memory if the inevitable top on RHM common downslope is 10%? Answer: P=D1/(r-g)=5.6/(0.1-0.06)=140 A.12 James River $3.38 favored is merchandise for $45.25. The like dividend is non-growing.

What is the required return on James River preferred contain? Answer: r=D/P=3.38/45.45=7.437% A.14 mobilise Toyota has non-maturing (perpetual) preferred stock outstanding that pays a $1.00 quarterly dividend and has a required return of 12% APR (3% per quarter). What is the stock worth? Answer: P=D/r=1/0.03=33.3 B16: Philadelphia Electric has many bonds hobbyhorse on the New York Stock Exchange. imagine PhilEl’s bonds have very(a) coupon rates of 9.125% exactly that one issue matures in 1 year, one in 7 years, and the third in 15 years. Assume that a coupon payment was do yesterday. A: If the yield to maturity for all three bonds is 8%, what...If you want to get a full essay, order it on our website: Ordercustompaper.com

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