Saudi Electronic University Finance Mathematical Quotations Questions

Q1. What is the current market price of a bond that has a face value of $1 million at the end of 2 years and pays semiannually coupons at a rate of 5.2% p.a., if the discount rate is 8% p.a.?(Show your calculations) (1.5 Marks)

Q2. Facebook paid its common stocks a dividend of $0.77 last year. The company expects growth to continue at 10% p.a. for the next 2 years and 5% p.a. thereafter. What is the current price of the share? common shareholders’ rate of return is 10% p.a.(Show your calculations) (2 Marks)

Q3.Your company is looking at a project that requires a $50,000 investment. It is expected that the project will generate cash flows of $15,000 in year 1, $20,000 in year 2, $17,000 in year 3, and $13,000 in year 4. Using the NPV method, should the project be undertaken if your shareholders’ required rate of return is 5%?(Show your calculations) (1.5 Marks)