Problem 5-01
Bond Valuation with Annual Payments

Jackson Corporation's bonds have 5 years remaining to maturity.Interest is paid annually, the bonds have a $1,000 par value, andthe coupon interest rate is 7%. The bonds have a yield to maturityof 12%. What is the current market price of these bonds? Round youranswer to the nearest cent.

Problem 5-02
Yield to Maturity for Annual Payments

Wilson Wonders' bonds have 15 years remaining to maturity.Interest is paid annually, the bonds have a $1,000 par value, andthe coupon interest rate is 12%. The bonds sell at a price of$1,100. What is their yield to maturity? Round your answer to twodecimal places.

Problem 5-06
Maturity Risk Premium

The real risk-free rate is 3%, and inflation is expected to be4% for the next 2 years. A 2-year Treasury security yields 8.5%.What is the maturity risk premium for the 2-year security?

Problem 5-07
Bond Valuation with Semiannual Payments

Renfro Rentals has issued bonds that have a 11% coupon rate,payable semiannually. The bonds mature in 14 years, have a facevalue of $1,000, and a yield to maturity of 8.5%. What is the priceof the bonds? Round your answer to the nearest cent.

Problem 5-13
Yield to Maturity and Current Yield

You just purchased a bond that matures in 15 years. The bond hasa face value of $1,000 and has an 8% annual coupon. The bond has acurrent yield of 8.37%. What is the bond's yield to maturity? Roundyour answer to two decimal places.

Problem 7-02
Constant Growth Valuation

Boehm Incorporated is expected to pay a $3.20 per share dividendat the end of this year (i.e., D₁ = $3.20). The dividendis expected to grow at a constant rate of 5% a year. The requiredrate of return on the stock, r_s, is 11%. What is theestimated value per share of Boehm's stock? Round your answer tothe nearest cent.

Problem 7-04
Preferred Stock Valuation

Nick's Enchiladas Incorporated has preferred stock outstandingthat pays a dividend of $4 at the end of each year. The preferredsells for $40 a share. What is the stock's required rate of return(assume the market is in equilibrium with the required return equalto the expected return)? Round the answer to two decimalplaces.

Problem 7-05
Nonconstant Growth Valuation

A company currently pays a dividend of $1 per share(D₀ = $1). It is estimated that the company's dividendwill grow at a rate of 17% per year for the next 2 years, and thenat a constant rate of 8% thereafter. The company's stock has a betaof 1.8, the risk-free rate is 5%, and the market risk premium is4%. What is your estimate of the stock's current price? Do notround intermediate calculations. Round your answer to the nearestcent.

Problem 7-07
Horizon Value of Free Cash Flows

Current and projected free cash flows for Radell GlobalOperations are shown below.

	Actual 2016	2017	Projected 2018	2019
Free cash flow	$607.24	$667.92	$707.97	$750.42
(millions of dollars)

Growth is expected to be constant after 2018, and the weightedaverage cost of capital is 10.4%. What is the horizon (continuing)value at 2019 if growth from 2018 remains constant? Round youranswer to the nearest dollar. Round intermediate calculations totwo decimal places.