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Finance 1. Garvin Enterprises' bonds currently sell for $1,150. They have a 6-year maturity, an annual coupon of $85, and a par value of $1,000. What is their current yield? 2. Wachowicz Corporation issued 15-year, noncallable, 7.5% annual coupon bonds at their par value of $1,000 one year ago. Today, the market interest rate on these bonds is 5.5%. What is the current price of the bonds, given that they now have 14 years to maturity? 3. McDonnell Manufacturing is expected to pay a dividend of $1.50 per share at the end of the year (D1 = $1.50). The stock sells for $34.50 per share, and its required rate of return is 11.5%. The dividend is expected to grow at some constant rate, g, forever. What is the equilibrium expected growth rate? Answer Summary The solution explains some questions relating to current yield, price of bonds and growth rate for stocks ...s to maturity are 14. Interest is an annuity and so we use the PVIFA table, for principal which is a lump sum we use the PVIF table Price = 75 x PVIFA(14,5.5%) + 1,000 X PVIF(14,5.5%) Price = 75 X 9.5896 + 1,000 X 0.4726 Price = $1,191.79 3. Us...


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