Use the Appropriate Factors from Chapter 6, Table 6-4 (Present

question 44

Essay

Use the appropriate factors from Chapter 6, Table 6-4 (Present Value of $1)or Table 6-5 (Present Value of an Annuity of $1), to answer the following questions.
(a.)Yoko Co.'s common stock is expected to have a dividend of $3 per share for each of the next four years, and it is estimated that the market value per share will be $42 at the end of four years.If an investor requires a return on investment of 12%, what is the maximum price the investor would be willing to pay for a share of Yoko Co.common stock today?
(b.)Lashana bought a bond with a face amount of $1,000, a stated interest rate of 10%, and a maturity date 20 years in the future for $1,025.The bond pays interest on a semi-annual basis.Five years have gone by and the market interest rate is now 12%.What is the market value of the bond today?

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GAAP

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