This preview shows pages 1–3. Sign up to view the full content.
This preview has intentionally blurred sections. Sign up to view the full version.
View Full Document
Unformatted text preview: (Assume the company chooses on the basis of aftertax returns.) (Points: 20) 3. (TCO D) Bond value  semiannual payment Assume that you wish to purchase a 20year bond that has a maturity value of $1,000 and makes semiannual interest payments of $40. If you require a 10 percent nominal yield to maturity on this investment, what is the maximum price you should be willing to pay for the bond? (Points: 25) 4. (TCO E) Constant growth stock The last dividend paid by ABC Company was $2.00. ABC’s growth rate is expected to be a constant 4 percent. ABC's required rate of return on equity (k s ) is 9 percent. What is the current price of ABCs common stock? (Points: 25) 5. (TCO B, F) NPV As the director of capital budgeting for Denver Corporation, you are evaluating two mutually exclusive projects with the following net cash flows: Cash Flows A B$100,000$125,000...
View
Full
Document
This note was uploaded on 06/15/2011 for the course FI515 FI515 taught by Professor Fi515 during the Spring '10 term at Keller Graduate School of Management.
 Spring '10
 fi515

Click to edit the document details