Problem 1: A $1,000 par value bond with a 10 year maturity date pays $35 quarterly interest. Your required rate of return is 12% with quarterly compounding. How much should you pay for this bond?
Problem 2: The growth rate of Campbell Company is expected to be 4% for 1 year, 5% the next year, then 6 % for the following year and then the growth rate is expected to continue at 7%. The company paid a dividend of $2 last year. The required rate of return is 10%. Calculate the current price of Campbell Company's common stock.
Problem 3: Bregg Company paid a dividend last year of $2 and is expected to grow at a constant rate of 5%, and its dividend yield is 4%. Business risk for this company is average for the industry, but new products are driving expectations that its earnings and dividends will grow at a rate of 40% this year and 25% the following year. Following this period, growth is expected to be at 5%. What is the value per share of Bregg Company's stock?