1. A 5% 20-year semi-annual bond offers an YTM of 5%. If the market interest rate will increase to 6.5% in one year (there will 19 years left to maturity then), what is the change in price that the bond will experience in dollars during the next year?
2. Gonzales Corporation generated free cash flow of $83 million this year. For the next two years, the company's free cash flow is expected to grow at a rate of 10 %. After that time, the company's free cash flow is expected to level off to the industry long-term growth rate of 4% per year. If the weighted average cost of capital is 9 % and Gonzales Corporation has cash of $100 million, debt of $300 million, and 100 million shares outstanding, what is Gonzales Corporation's expected free cash flow in year 2?
A. $2,297.84
B. $100.43
C. $2,088.94
D. $90.39
3. Union Pacific’s reported the following financial information at yearend 2014:
Income Statement (in Millions) Other Data (in Millions)
Net Sales $6,800
Shares Outstanding 353.00
Less: Operating Expenses $4,550
Stock Dividends $441.25
Earnings Before Taxes $2,250
Less: Taxes $ 785
Stock Price=$50.00 per share
Net Earnings $1,765
What is the P/E ratio of Union Pacific?
a. 8.5 b. 10.0 c. 12.5 d. 15.0 e. 17.5