1. Ginko Inc. has bonds outstanding that mature in 20 years. The bonds have $1000 par value, pay interest annually at a rate of 10 percent, and have a current selling price of $875.25. What is the yield to maturity?

2. A share of common stock just paid a dividend of $3.25 per share. The expected long-run growth rate for this stock is 18%. If investors require a rate of return of 24%, what should the price of the stock be?

3. Vertex bonds have a maturity value of $1000. The bonds carry a coupon rate of 14 percent. Interest is paid semi-annually. The bonds will mature in seven years. If the current market price is $1092.65, what is the yield to maturity on the bond?

4. Bangor Company's common stock paid a dividend last year of $3.70. You believe that the long-term growth in the dividends of the firm will be 8 percent per year. If your required return for Bangor is 14 percent, how much are you willing to pay for the stock?

1. Ginko Inc. has bonds outstanding that mature in 20 years. The bonds have $1000 par value, pay interest annually at a rate of 10 percent, and have a current selling price of $875.25. What is the yield to maturity?

From the TI BA II Plus calculator, we press
N = 20
FV = 1000
PV = - 875.25
PMT = 1000*10% = 100
Then compute CPT:
I/Y = 11.632%

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