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1. UOP FIN 571 Week 4 Connect Problems NEW
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Q-1
Even though most corporate bonds in the United States make
coupon payments semiannually, bonds issued elsewhere often
have annual coupon payments. Suppose a German company
issues a bond with a par value of €1,000, 20 years to maturity,
and a coupon rate of 7 percent paid annually.
If the yield to maturity is 8.1 percent, what is the current price
of the bond? (Do not round intermediate calculations and
round your answer to 2 decimal places, e.g., 32.16.)
Q-1 (Set 2)
Watters Umbrella Corp. issued 30-year bonds 2 years ago at a
coupon rate of 7.4 percent. The bonds make semiannual
payments. If these bonds currently sell for 83 percent of par
value, what is the YTM? (Do not round intermediate
calculations and enter your answer as a percent rounded to 2
decimal places, e.g., 32.16.)

2. 2.Microhard has issued a bond with the following
characteristics:
Par: $1,000
Time to maturity: 15 years
Coupon rate: 11 percent
Semiannual payments
Calculate the price of this bond if the YTM is (Do not round
intermediate calculations and round your answers to 2 decimal
places, e.g., 32.16.):
Q-2 (Set 2)
Union Local School District has bonds outstanding with a
coupon rate of 3.7 percent paid semiannually and 15 years to
maturity. The yield to maturity on these bonds is 4.3 percent
and the bonds have a par value of $5,000.
What is the dollar price of the bond? (Do not round
intermediate calculations and round your answer to 2 decimal
places, e.g., 32.16.)
Q-3 (Set 1)
Yan Yan Corp. has a $2,000 par value bond outstanding with a
coupon rate of 5.5 percent paid semiannually and 16 years to
maturity. The yield to maturity of the bond is 5.8 percent.
What is the dollar price of the bond? (Do not round

3. intermediate calculations and round your answer to 2 decimal
places, e.g., 32.16.)
Q-3 (Set 2)
A Japanese company has a bond outstanding that sells for 90
percent of its ¥100,000 par value. The bond has a coupon rate
of 5.7 percent paid annually and matures in 19 years.
What is the yield to maturity of this bond? (Do not round
intermediate calculations and enter your answer as a percent
rounded to 2 decimal places, e.g., 32.16.)
Q-3(Set 3)
Even though most corporate bonds in the United States make
coupon payments semiannually, bonds issued elsewhere often
have annual coupon payments. Suppose a German company
issues a bond with a par value of ? 1000, 25 years to maturity,
and a coupon rate of 6.4 percent paid annually. If the yield to
maturity is 7.5 percent, what is the current price of the bond?
Q-4 (Set 1)
The next dividend payment by ECY, Inc., will be $1.96 per share.
The dividends are anticipated to maintain a growth rate of 4
percent, forever. The stock currently sells for $39 per share.
What is the dividend yield? (Do not round intermediate
calculations and enter your answer as a percent rounded to 2
decimal places, e.g., 32.16.)
Dividend yield %
What is the expected capital gains yield? (Do not round
intermediate calculations and enter your answer as a percent

4. rounded to 2 decimal places, e.g., 32.16.)
Capital gains yield %
Q-4 (Set 2)
4.Schiller Corporation will pay a $3.14 per share dividend next
year. The company pledges to increase its dividend by 5
percent per year, indefinitely. If you require a return of 12
percent on your investment, how much will you pay for the
company’s stock today? (Do not round intermediate
calculations and round your answer to 2 decimal places, e.g.,
32.16.)
5. Siblings, Inc., is expected to maintain a constant 3.6 percent
growth rate in its dividends, indefinitely. The company has a
dividend yield of 5.4 percent.
What is the required return on the company's stock? (Do not
round intermediate calculations and enter your answer as a
percent rounded to 2 decimal places, e.g., 32.16.)
Required return %
5. (Set 2) The next dividend payment by ECY, Inc., will be $1.60
per share. The dividends are anticipated to maintain a growth
rate of 6 percent, forever. The stock currently sells for $30 per
share.
What is the required return? (Do not round intermediate
calculations and enter your answer as a percent rounded to 2
decimal places, e.g., 32.16.)

5. Q-6 (Set 1)
Ayden, Inc., has an issue of preferred stock outstanding that
pays a dividend of $6.75 every year, in perpetuity. This issue
currently sells for $93 per share.
What is the required return? (Do not round intermediate
calculations and enter your answer as a percent rounded to 2
decimal places, e.g., 32.16.)
Q-6 (Set 2)
6. The Starr Co. just paid a dividend of $1.55 per share on its
stock. The dividends are expected to grow at a constant rate of
6 percent per year, indefinitely. Investors require a return of
14 percent on the stock.
What is the current price? (Do not round intermediate
calculations and round your answer to 2 decimal places, e.g.,
32.16.)
What will the price be in three years? (Do not round
intermediate calculations and round your answer to 2 decimal
places, e.g., 32.16.)
What will the price be in 7 years? (Do not round intermediate
calculations and round your answer to 2 decimal places, e.g.,
32.16.)
7. Zoom stock has a beta of 1.46. The risk-free rate of return is
3.07 percent and the market rate of return is 11.81 percent.
What is the amount of the risk premium on Zoom stock?
8. The risk premium for an individual security is computed by:

6. 9. The risk-free rate of return is 3.68 percent and the market
risk premium is 7.84 percent. What is the expected rate of
return on a stock with a beta of 1.32?
10. Mullineaux Corporation has a target capital structure of 70
percent common stock and 30 percent debt. Its cost of equity is
18 percent, and the cost of debt is 6 percent. The relevant tax
rate is 30 percent.
What is the company’s WACC? (Do not round intermediate
calculations and enter your answer as a percent rounded to 2
decimal places, e.g., 32.16.)
Question 10 Set 2
Central Systems, Inc. desires a weighted average cost of capital
of 9 percent. The firm has an after-tax cost of debt of 5 percent
and a cost of equity of 12 percent. What debt-equity ratio is
needed for the firm to achieve its targeted weighted average
cost of capital?
11.Miller Manufacturing has a target debt–equity ratio of .55.
Its cost of equity is 14 percent, and its cost of debt is 9 percent.
If the tax rate is 40 percent, what is the company’s WACC? (Do
not round intermediate calculations and enter your answer as a
percent rounded to 2 decimal places,
12.Filer Manufacturing has 4 million shares of common stock
outstanding. The current share price is $76, and the book value
per share is $5. The company also has two bond issues
outstanding. The first bond issue has a face value $90 million, a
coupon of 5 percent, and sells for 94 percent of par. The second

7. issue has a face value of $70 million, a coupon of 6 percent, and
sells for 104 percent of par. The first issue matures in 20 years,
the second in 3 years.
a. What are the company's capital structure weights on a book
value basis? (Do not round intermediate calculations and
round your answers to 4 decimal places, e.g., 32.1616.)
b. What are the company's capital structure weights on a
market value basis? (Do not round intermediate calculations
and round your answers to 4 decimal places, e.g., 32.1616.)
c. Which are more relevant?
13. Titan Mining Corporation has 8.9 million shares of common
stock outstanding and 330,000 5 percent semiannual bonds
outstanding, par value $1,000 each. The common stock
currently sells for $37 per share and has a beta of 1.45, and the
bonds have 15 years to maturity and sell for 118 percent of par.
The market risk premium is 7.7 percent, T-bills are yielding 4
percent, and the company’s tax rate is 40 percent.