1. What is the value of a bond that matures in 60 years, has an annual coupon rate of $60, and a par value of $1,000? Assume a required rate of return of 12%, and round your answer to the nearest $10.
a) $410
b) $490
c) $500
d) $520
2. Cowtown Cellular bonds mature in 1 1/2 years with a face value of $1,000. They pay a coupon rate of 12% distributed semi-annually. If the required rate of return on these bonds is 14% what is the bond's value?
a) $1,026.73
b) $973.76
c) $1,022.74
d) $814.26
3. Moo Moo Land Dairy Co. has net income of $450,000 this year. The book value of MML common stock is $3 million dollars. The company's dividend payout ratio is 60% and is expected to remain this way. What is Moo Moo Land Dairy's sustainable growth rate?
a) 3%
b) 9%
c) 6%
d) 10%