Based on the information provided below, compute the value of a bond and the value of common stock (LO 5). 1. Suppose you have a $1,000 face value bond with 12 years to maturity, a coupon rate of 6% and a yield to maturity of 8%. If the bond makes semiannual payments, what is it's price today? (Hint: www.accountingcoach.com/online-accounting-course/89Xpg07.html ) 2. Compute the Value of Acme Common Stock if the next dividend is expected to be $1.20 per share. Investors require a 9% rate of return on stocks with the same risk as Acme. Based on the dividend growth model, what is Acme's stock worth today? Both answers are correct for week 4. For question one, it asks to identify the bond price. The present value is correct at $390. In order to compute the bond value, Present Value + Annuity Present Value = Total Present Value.

Based on the information provided below, compute the value of a bond and the value of common stock (LO 5).

1. Suppose you have a $1,000 face value bond with 12 years to maturity, a coupon rate of 6% and a yield to maturity of 8%. If the bond makes semiannual payments, what is it's price today?

(Hint: www.accountingcoach.com/online-accounting-course/89Xpg07.html )

2. Compute the Value of Acme Common Stock if the next dividend is expected to be $1.20 per share. Investors require a 9% rate of return on stocks with the same risk as Acme. Based on the dividend growth model, what is Acme's stock worth today?

Both answers are correct for week 4. For question one, it asks to identify the bond price. The present value is correct at $390. In order to compute the bond value, Present Value + Annuity Present Value = Total Present Value.