1. A bond has a coupon rate of 7% and has 5 years until maturity and the yield to maturity is 5%.
a. What is the price of the bond? _____________
b. How much annual interest is paid to the bondholder? ________
2. A zero-coupon bond with a 20-year maturity, has a yield to maturity of 6% and a par value of $100,000?
a. What is the price of the bond? ____________.
3. If you paid $980 for a 10- year bond that pays $70 a year in interest.
a. What is the bond’s yield to maturity? _______________.
4. A project has an initial investment of $100,000, an opportunity cost of capital of 6% and the following projected cash flows. Yr. 1 - $35,000 Yr. 2 - $40,000 Yr. 3 - $45,000
a. What is the NPV for this 3-year project? _____________.
5. A stock is expected to pay a future annual dividend of $5, and has a growth rate of 2%. The required rate of return is 10%.
a. What is the price of the stock? ________________.