# Valuation And Characteristics Of Bonds And Stock

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### Question Description

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Valuation and Characteristics of Bonds and Stocks

Complete the following problems:

• Problem 10-1: Bond Valuation 1
• Problem 10-2: Bond Valuation 2
• Problem 10-3: Bond Valuation 3
• Problem 10-4: Preferred Stock Valuation
• Problem 10-5: Common Stock Valuation 1
• Problem 10-6: Common Stock Valuation 2
• Problem 10-7: Cost of Trade Credit
• Problem 10-8: Cost of Commercial Paper

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fareeha27
School: UCLA

Hello, please find the attached solution. I have provided formulas for all the answers. Double click on cells to see the formulas. Please let me know if you have any question.Thanks

Module 10 CT PROBLEMS
VALUATION AND CHARACTERISTICS OF BONDS AND STOCKS
CT 10 - 1
BOND VALUATION
Calculate the value of a bond that will mature in 20 years and has a SAR 1,000 face value. The annual coupon
interest rate is 5 percent, and the investor's required rate of return is 7 percent. Interest is paid annually.
DATA
Years
Face value
Interest
Required rate of return
Present Value = FV [1/(1+R)ᴺ]
Pv annuity= PMT[1-(1+r)¯ᴺ/r ]
Value of Bond

20
1,000
5.0%
7.0%
258.42
529.70
788.12

NPER
FV
50 PMT
Rate

CT 10 - 2
BOND VALUATION 2
Calculate the value of a bond that will mature in 12 years and has a SAR 2,500 face value. The interest rate is 10
percent and is paid semi-annually, and your required rate of return is 4 percent. (a) What is the value of the bond?
(b) What is the value of the bond if interest is paid annually instead of semianually?
DATA
Coupon rate
10.0%
250
125 PMT
Times interest paid
2
Years to Maturity
12
24
NPER
Par Value
2,500
FV
Required rate of return
4.0%
0.02
Rate

A) Present value =
(3,918.54)
B) If the interest is annual =
(3,907.76)

CT 10 - 3
BOND VALUATION 3
Bisha Corporation issued a bond with a SAR1,200 par value that pays SAR 72 in annual interest. The...

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