What is the present value of a ticket to the Grand Prize in the "Set for Life" Prize that makes 20 consecutive annual payments of $50,000 starting immediately. The eleventh payment (to be received at the end of year 10) is not $50,000 but only $20,000 (that is, the eleventh payment is $30,000 LESS than the other 19 payments). Which of the following comes closest to the present value of the prize if interest rates are 4%
Limerick currently pays a dividend of $1.50 per share. Which comes closest to Limerick's price per share if we assume that their dividend grows by 8% for two consecutive years, and then grows by 4% each year (starting in year 3) thereafter forever? Use a required rate of return of 10%.
Jensen Corporations' bonds were issued two years ago and have 8 more years till maturity. The bonds were issued at $1,000 par, but the latest market price has fallen to $975 and the bonds have a yield to maturity of 11.5%. Based on this information, what coupon rate is attached to the bond?