BUSN 379 DeVry Entire Course

6.16.Find % Change of Bond Bill and Ted(24/24)
a.If the YTM suddenly rises to 9 percent:(Show work):
b.If the YTM suddenly falls to 5 percent:
c.
d. What does this problem tell you about the interest rate risk of longer-term bonds?
7.11.With a return of 8 percent on this stock, how much should you pay? (4/4)
7.12.Value a stock with two different required returns. Use the constant growth model.(12/12)
a.Price @ required return of 12%:
b.Price @ required return of 8%:
c.What does a higher required return meanto the stock ?
6.16d: All else the same, the longer the maturity of a bond, the greater is its price sensitivity to changes in interest rates.
7.12c All else held constant, a higher required return means that the stock will sell for a lower price. Also, notice that
the stock price is very sensitive to the required return. In this case, the required return fell by 1/3 but the stock price
more than doubled.
BUSN 379 DeVry Week 4 Homework
Please complete the following exercises from Chapter 8 of your textbook and post them in the Dropbox.
Chapter 8: 3, 4, 5, and 6
Chapter 7: 3, 4, 5, and 6
8.3
Which Project should be accepted A or B?(4/4)
8.4
Calculate AAR, the average net income divided by the average book value.(12/12)
a.Average net income =
b.Average book value =
c.AAR =
8.5
Calculate IRR:(8/8)
a.IRR =
b.Should the project be accepted and why? .
8.6
Calculate NPV:the PV of the outflows minus by the PV of the inflows.(16/16)
a.@ 9% required return.
b.Should the project be accepted:
c.@ 21% required return.
d.Should the project be accepted: