How much will you pay for the company stock


Problem 1: Watters Umbrella Corp issed 15 yr bonds 2 yrs ago at a coupon rate of 7.8%. The bonds make semiannual payments. If these bonds currently sell for 105% of par value, what is the YTM?

Problem 2: The next dividend payment by ZYX, Inc., will be $2.85 per share. The dividends are anticipated to maintain a 4.5% growth rate, forever. If ZYX stock currently sells for $84 per share, what is the required return?

Problem 3: Mickelson Corporation will pay a $2.90 per share dividend next year. The company pledges to increases its duvudebd by 4.75 percent per year, indefinitely. If you require an 11 percent return on your investment, how much will you pay for the company's stock?

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Finance Basics: How much will you pay for the company stock
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