# Answer the following questions using BA2 PLUS Financial Calculator

Problem 1:

A bond was issued 3 years ago at a coupon rate of 6%. Since then, interest rates have declined to 4%. The bond matures 20 years from today. Compute the current market value of this bond.

Problem 2:

A stock paid a dividend of \$1.50 yesterday. The stock is expected to grow at a rate of 4% per year indefinitely. Investors require a return of 13% to invest in this stock. Compute its fair market value.

Problem 3:

A stock’s next 3 dividends are as follows: \$0.50, 0, \$1.00. After that, the stock is expected to grow at a rate of 2% indefinitely. The required return on this stock is 12%. Compute its intrinsic value.

Problem 4:

A stocks next 2 dividends are as follows: \$0.25 and \$1.00. After that, the stock is expected to grow at a rate of 4% indefinitely. The required return on this stock is 16%. Compute its fair market value.

Problem 5:

A stock’s next expected dividend is \$0.50. Dividends are expected to grow at a rate of 3% indefinitely. The required return is 10%. Compute its intrinsic value.