Following are the securities and projections for Mogul Corp:
Stock A: REQUIRED RATE OF RETURN = 5% Constant-growth - growth rate of 3% D0 = $3.00
Stock B: REQUIRED RATE OF RETURN = 7% D0 = $4.00, growth at 5% per year for 2 years, followed by 4% forever
Stock C: REQUIRED RATE OF RETURN = 9% D0 = $2.00, growth at 25% for next 4 years, followed by 5% forever
Mogul has a 3.5% Treasury bond, semi-annual interest, with 4 years left to maturity and a quoted price of $962.81.
1) Calculate the bond’s current yield and yield to maturity.
2) Calculate the value per share today for stock A.
3) Calculate the value per share 4 years from today for stock B.
4) Calculate the value per share today for stock C.