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Chapter_05

# Chapter_05 - Chapter 5 Problems 1-40 Input boxes in tan...

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Chapter 5 Problems 1-40 Input boxes in tan Output boxes in yellow Given data in blue Calculations in red Answers in green NOTE: Some functions used in these spreadsheets may require that the "Analysis ToolPak" or "Solver Add-in" be installed in Excel. To install these, click on "Tools|Add-Ins" and select "Analysis ToolPak" and "Solver Add-In."

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Chapter 5 Question 1 Input area: Years to maturity 10 Face value \$1,000 a) Yield to maturity 5% b) Yield to maturity 10% c) Yield to maturity 15% Output area: a) Price \$613.91 b) Price \$385.54 c) Price \$247.18
Chapter 5 Question 2 Input area: Settlement date 1/1/2006 Maturity date 1/1/2026 Annual coupon rate 8.00% Coupons per year 2 a) Yield to maturity 8% b) Yield to maturity 10% c) Yield to maturity 6% Output area: a) Price \$1,000.00 b) Price \$828.41 c) Price \$1,231.15

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Chapter 5 Question 3 Input area: Settlement date 1/1/2006 Maturity date 1/1/2016 Annual coupon rate 8.60% Coupons per year 2 Face value (% of par) 100 Bond price (% of par) 97 Output area: Yield to maturity = 9.06%
Chapter 5 Question 4 Input area: Dividend paid \$1.40 Dividend growth rate 6% Required return 12% # of years 0 Output area: Price \$24.73

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Chapter 5 Question 5 Input area: Dividend paid \$3.10 Dividend growth rate 5% Stock price \$48.00 Output area: Required return = 11.46%
Chapter 5 Question 6 Input area: Dividend paid \$3.60 Dividend growth rate 4.50% Required return 13% Output area: Price = \$42.35

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Chapter 5 Question 7 Input area: Stock price \$70.00 Required return 12.0% Output area: Current dividend = \$3.96
Chapter 5 Question 8 Input area: Current dividend \$12.00 Required return 10.0% Years until dividend ceases 8 Output area: Share price = \$64.02

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Chapter 5 Question 9 Input area: Earnings \$20,000,000 ROE 14% Retention ratio 60% Output area: Growth rate 8.40% Next year's earnings \$21,680,000.00
Chapter 5 Question 10 Input area: Settlement date 01/01/06 Maturity date 01/01/19 Miller Corp. Coupon rate 8% Yield to maturity 6% Face value (% of par) 100 # of coupons per year 2 Modigliani Company Coupon rate 6% Yield to maturity 8% Face value (% of par) 100 # of coupons per year 2 Output area: Price of Miller bond \$1,178.77 Price of Modigliani bond \$840.17 All else held equal, the premium over par value for a premium bond declines as maturity approaches, and the discount from par value for a discount bond declines as maturity approaches. In both cases, the largest percentage price changes occur at the shortest maturity lengths.

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Chapter 5 Question 11 Input area: Settlement date 1/1/2006 Maturity date 1/1/2015 Annual coupon rate 8.4% Coupons per year 2 Face value (% of par) 100 Bond price (% of par) 104 Output area: Current yield = 8.08% Yield to maturity = 7.77% Effective annual rate = 7.92%
Chapter 5 Question 12 Input area: Settlement date 1/1/2006 Maturity date 1/1/2026 Annual coupon rate 8% Coupons per year 2 Face value (% of par) 100 Bond price (% of par) 109.5 Output area: Yield to maturity = 7.10%

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Chapter 5 Question 13 Input area: Dividend paid \$3.00 Dividend growth rate 5.0% Initial required return 16% Second required return 14% Final required return 11% Initial # of years 3 Second # of years 3 Output area: Present value at beginning of final period = \$70.36 Present value at beginning of second period = 56.35 Present value at beginning of initial period = 43.50 Share price = \$43.50
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