1. Cyberdyne Systems is issuing a series of coupon bonds to raise $250M to fund research and development at its Skynet division. Each bond will have a face value of $1,000 and will mature in 10 years. The bonds will pay semi-annual coupons with a coupon rate of 6.5%. The yield to maturity on the bonds is 10%. What is the fair price for one of the bonds?
A) $700.23
B) $781.91
C) $876.54
D) $933.41
E) $1,000.00
2. Bluth’s Original Frozen Banana Inc. operates a chain of frozen banana stands in California, and is set to expand across the country. Bluth’s is famous for its chocolate dipped frozen banana treats. The company has just reported EPS of $1.77 and expects to maintain an 18% payout ratio. Shareholders require a return of 9% and dividends are forecast to grow at 7.5%. What is the P/E Constant for Bluth’s?
A) *12.00
B) 14.75
C) 17.70
D) 21.00
E) 42.00