Answer:
$810.63
Explanation:
For computing the current market price we need to use the present value formula i.e to be shown in the attachment below
Provided that,
Future value = $1,000
Rate of interest = 15%
NPER = 21 years
PMT = $1,000 × 12% = $120
The formula is shown below:
= -PV(Rate;NPER;PMT;FV;type)
So, after applying the above formula, the bond current market price is $810.63
Answer:
The Market price for the stock will be 26.48 according to the gordon dividend grow model.
Explanation:
We will calculate the stock price, using the gordon model for the dividend grow model:
D1 = 2.78
return = 15%
grow = 4.5%
Stock market = 26,47619 = $26.48