Computation of value of bond

1. The Chestnut Company has a level-coupon bond outstanding (face value = $1,000) that pays $120 per year and has 10 years to maturity. If the yield for similar bonds is currently 14%, what is the bond's value?

2. You earned a total return of 8% on Stock A this year, earned 7% last year, and earned 15% two years ago. Calculate both the three-year holding period return and the average three year return.

3. Calculate the expected return on the stock of Mitro Corporation. The beta is estimated to be 1.4, the market risk premium is 9% and the risk-free rate is 4%.

4. A portfolio exists containing stocks A, B, and C held in proportions 50%, 30%, and 20% respectively. The expected returns on the three stocks are given by 10%, 15%, and 16% respectively. Calculate the portfolio's expected return.

5. A project has a cost of $180. It will have a life of 3 years. The cost will be depreciated straight-line to a zero salvage value, and will be worth $40 at that time. Cash sales will be $200 per year and cash costs will run $110 per year. The firm will also need to invest $70 in net working capital at year 0. The appropriate discount rate is 8% (use for all flows), and the corporate tax rate is 40%. What are the cash flows in years 1, 2, and 3?

6. Conlin Containers announces that on June 1, 1998, it will pay a dividend of $3.00 per share on July 15 to all holders on record as of June 30. The firm's stock price is currently at $50 per share. Assume that all investors are in the 28% tax bracket. Given that the ex-dividend date is June 26, what should happen to Conlin's stock price on June 26?