Finance Assignment
Instructions:
You must show any and all work!!!!!!!
• A company is expected to pay a dividend of $3.25 per share next year (t=1) and the dividend is expected to grow at a constant rate forever. The stock is currently selling for $42. If the required rate of return is 10 percent, what is the dividend growth rate?
Note: Express your result as a percentage and keep two digits after the decimal point (e.g. 12.34% or 1.23%).
• A 6.25 percent coupon bond (par value=$1,000) with 16 years left to maturity is offered for sale at $1,015.25. What is the yield to maturity of the bond? (Assume interest payments are semiannual.)
Note: Express your result as a percentage and keep two digits after the decimal point (e.g. 12.34% or 1.23%).
• A company has a current market value of $65 per share with earnings per share of $4.32. What is the net present value of its growth opportunities if the required rate of return is 8 percent?
Note: Express your result as dollars and keep no digits after the decimal point.
• A bakery is considering the purchase of a $9,500 coffee maker. The coffee maker has an economic life of five years and will be fully depreciated by the straight-line method. The machine will produce 5,300 cups of coffee per year, with each costing $2.15 to make and priced at $4.25. Assume that the discount rate is 14 percent and the tax rate is 30 percent. Should the bakery make the purchase?
Format your assignment according to the give formatting requirements:
• The answer must be using Times New Roman font (size 12), double spaced, typed, with one-inch margins on all sides.
• The response also includes a cover page containing the student's name, the title of the assignment, the course title, and the date. The cover page is not included in the required page length.
• Also include a reference page. The references and Citations should follow APA format. The reference page is not included in the required page length.