Question 1: DTM Company's Shares is expected to pay a dividend of $0.80 per share every year indefinitely.The stock is current trading at a price of $18.90, and the equity cost of capital for the firm is 6.4%,. Based on this information, what price per share are investors expected to pay in 5 years (into the future)?
Question 2: NTR Enteprises pays a dividend of $2.25 per share and is expected to pay this amount indefinitely. If NTR's equity cost of capital is 12%, which of the following would be expected to be closest to NTR's stock price?
Question 3: Verano Island Resorts issued a $1,000 bond with a coupon rate of 5.4% paid semiannually. The bond has five years to maturity and a yield to maturity of 7.5%.
What will happen to the price of the bond, if interest rates rise and the yield to maturity increases to 7.8%?
Question 4: ARTIC SUN Fruit Processor, Inc. issued a coupon bond with the following characteristics:
- Par Value: $5,000
- Coupon Rate:4.5% (paid semi-annually)
- Maturity: 5 years
If the bond is currently trading for a price of $4,876, what is its yield to maturity?
Question 5: KF Ltd. is expected to have earnings per share of $3 this year. The firm expects to pay out $1.50 of these earnings to shareholders in the form of a dividend. KF's return on new investments is 15% and its equity cost of capital is 12%. The expected growth rate for KF's dividends is closest to:
Question 6: You expect KT industries (KTI) will have earnings per share of $3 this year and expect that they will pay out $1.50 of these earnings to shareholders in the form of a dividend. KTI's return on new investments is 15% and their equity cost of capital is 12%. The value of a share of KTI's stock is closest to:
Question 7: XYZ Corporation has a dividend payout rate of 25%. The firm's current earnings of $18.50 per share are expected to grow at an annual rate of 5%, and its cost of equity capital is 10%. What is the firm's expected "price" per share?
Question 8: Von Bora Corporation (VBC) is expected to pay a $2.00 dividend at the end of this year. If you expect VBC's dividend to grow by 5% per year forever and VBC's equity cost of capital is 13%, then the value of a share of VBS stock is closest to:
Question 9: The government of Lumberlandia issued a zero-coupon bond with a $,1000 par value and 10 years years left until maturity. If investors estimate a YTM of 10.4% for this bond, its "price" is closest to:
Question 10: Azurro S.A will pay a dividend of $1.80 per share at this year's end and a dividend of $2.40 per share at the end of next year. It is expected that the price of Azurro's stock will be $44 per share after two years. If the firm's cost of equity capital of 8%, what is the maximum price that a prudent investor would be willing to pay for a share of Azurro's stock today?
Question 11: LMCV Trading is expected to pay dividends of $1.20 every six months for the next three years. If the current price of LMCV stock is $22.40, and the firm's equity cost of capital is 16%, what price would you expect LMCV stock to sell for at the end of three years?
Question 12: Rojas Mining, Ltd. issued a short-term security with the following characteristics:
Face value: $10,000
Coupon rate: 6.5% (paid semi-annually)
Maturity: 2 years
Yield to maturity: 8 % (APR)
Based on this information, what is the "price" of this bond?
Question 13: JAVELIN EXPRESS issues a 10 year bond at par with a coupon rate of 6% paid semi-annually. The yield to maturity at the beginning of the third year of the bond (8 years left to maturity) is 7.8%. What is the new price of the bond?
Question 14: A risk-free, zero-coupon bond with a $5,000 par value has ten years to maturity. If the bond currently trades at $3,650, what it the bond's yield to maturity?
Question 15: You bought 5,000 shares of TBN Corp. common stock at $22.00 per share. A year later, immediately after the firm paid a dividend of $1.50 per share, you sold your entire position at $26.00 per share. Based on this information, what is the capital gain rate for this transaction?