1) BSW Corporation has a bond issue outstanding with an annual coupon rate of 7 percent paid quarterly and four years remaining until maturity. The par value of the bond is $1,000. Determine the fair present value of the bond if market conditions justify a 15 percent, compounded quarterly, required rate of return. (Do not round intermediate calculations. Round your answer to 2 decimal places. (e.g., 32.16))
Fair present value
2) Calculate the yield to maturity on the following bonds.
a. A 10 percent coupon (paid semiannually) bond, with a $1,000 face value and 14 years remaining to maturity. The bond is selling at $935. (Do not round intermediate calculations. Round your answer to 3 decimal places. (e.g., 32.161))
Yield to maturity % per year
b. An 10.5 percent coupon (paid quarterly) bond, with a $1,000 face value and 10 years remaining to maturity. The bond is selling at $907. (Do not round intermediate calculations. Round your answer to 3 decimal places. (e.g., 32.161))
Yield to maturity % per year
c. An 9.5 percent coupon (paid annually) bond, with a $1,000 face value and 10 years remaining to maturity. The bond is selling at $1,057. (Do not round intermediate calculations. Round your answer to 3 decimal places. (e.g., 32.161))
3) Financial analysts forecast Limited Brands (LTD) growth for the future to be 10 percent. LTD’s most recent dividend was $0.50. What is the fair present value of Limited Brands’s stock if the required rate of return is 14.6 percent?
Fair present value$ -----------------?