Please show in detail how to compute the answer for the problems illustrated below:
Question 1: Consider a $1, 000 par value bond with a 7 percent annual coupon. The bond pays interest annually. There are 9 years remaining until maturity. What is the current yield on the bond assuming that the required return on the bond is 10 percent?
Question 2: Beck Company, a constant growth company, has a current market (and equilibrium) stock price of $20.00. Beck's next dividend, D1, is forecasted to be $2.00, and Beck is growing at an annual rate of 6 percent. Beck has a beta coefficient of 1.2, and the required rate of return on the market is 15 percent. As Beck's financial manager, you have access to insider information concerning a switch in product lines which would not change the growth rate, but would cut Beck's beta coefficient in half. If you buy the stock at the current market price, what is your expected percentage capital gain?
Question 3: You have been given the following projections for Rand Corporation for the coming year. Sales = 10, 000 units Sales price per unit = $10 Variable cost per unit = $5 Fixed costs = $10, 000 Bonds outstanding = $15, 000 kd on outstanding bonds = 8% Tax rate = 40% Shares of common stock outstanding = 10, 000 shares Beta = 1.4 kRF = 5% kM = 9% Dividend payout ratio = 60% Growth rate = 8% Calculate the current price per share for Rand Corporation.