Apocalyptica Corp. pays a constant $29 dividend on its stock. The company will maintain this dividend for the next 6 years and will then cease paying dividends forever.
Required:
If the required return on this stock is 10 percent, what is the current share price?
Seether Co. wants to issue new 11-year bonds for some much-needed expansion projects. The company currently has 10.0 percent coupon bonds on the market that sell for $1,281.20, make semiannual payments, and mature in 11 years. What coupon rate should the company set on its new bonds if it wants them to sell at par?