BUS 401 Week 2 Assignment, Mini Case, Alternative Investments

Apr 8th, 2015
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American Public University System
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MINI-CASE1)Bond:bond=i=n=required rate=selling price =Value=$1,000.007.625%106.0%$986.00$1,119.60Preferred Stock:par=selling price=dividend=required rate=Value=$50.00$39.00$2.81257.0%$40.18Common Stock:par=dividend=EPSEPS in five years# of years growthEPS growth=selling price=required rate=Value=1)Settlement DateMaturity DateCoupon rateYield to MaturityRedemption Value (% of par)Number of PaymentsPrice % of par)Price$5.00$2.10$2.40$4.48513.30%$80.0015.0%$139.602) Does not have a numerical solution2)3)Common Stock:par=dividend=EPS growth=selling price=required rate=Value=BondPreferred StockCommon Stock5.002.10-3%80.0015%$49.24Part c)I would prefer not to invest in Emerson's stock because it sells for aPart b)I would invest in all three investments sinceinvestments based on my required return.Part c)I would prefer not to invest in Emerson's stock because it sells for aprice that is higher than the value of stock based on my required rateof return.4)bond expected ror =7.7%preferred stock expected ror =7.2%dividend in year one =common stock expected ror =$2.3816.27%01/01/0

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