# FIN 571 Week 4 Connect Lab Latest 2016 Version

Jun 19th, 2016
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1. Watters Umbrella Corp. issued 20year bonds 2 years ago at a coupon rate of 5.4 percent. The bonds make semiannual payments. If these bonds currently sell for 85 percent of par value, what is the YTM? 2. Microhard has issued a bond with the following characteristics: Par: \$1,000 Time to maturity: 20 years Coupon rate: 8 percent Semiannual payments Calculate the price of this bond if the YTM is 3. Yan Yan Corp. has a \$2,000 par value bond outstanding with a coupon rate of 5.5 percent paid semiannually and 18 years to maturity. The yield to maturity of the bond is 6.2 percent. What is the dollar price of the bond? 4. The next dividend payment by ECY, Inc., will be \$1.56 per share. The dividends are anticipated to maintain a growth rate of 4 percent, forever. The stock currently sells for \$29 per share. What is the required return? 5. Schiller Corporation will pay a \$3.14 per share dividend next year. The company pledges to increase its dividend by 5 percent per year, indefini

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1. Watters Umbrella Corp. issued 20year bonds 2 years ago at a coupon rate of 5.4 percent.The bonds make semiannual payments. If these bonds currently sell for 85 percent of parvalue, what is the YTM?YTM = 6.86%2. Microhard has issued a bond with the following characteristics:Par: \$1,000Time to maturity: 20 yearsCoupon rate: 8 percentSemiannual paymentsCalculate the price of this bond if the YTM isPrice of the Bonda. 8 percent\$ 1,000.00b. 11 percent\$ 759.31c. 5 percent\$ 1,376.543. Yan Yan Corp. has a \$2,000 par value bond outstanding with a coupon rate of 5.5 percentpaid semiannually and 18 years to maturity. The yield to maturity of the bond is 6.2 percent.What is the dollar price of the bond?P = \$1,849.434. The next dividend payment by ECY, Inc., will be \$1.56 per share. The dividends areanticipated to maintain a growth rate of 4 percent, forever. The stock currently sells for \$29per share.What is the required return?R = 9.38%R = (D1 / P0) + gR = (\$1.56 / \$29.00) + .04R = .0938, or 9.38%5. Schiller Corporation will pay a \$3.14 per share dividend next year. The company pledges toincrease its dividend by 5 percent per year, indefinitely. If you requ

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