For the below, I want to make sure I am using the correct numbers for...
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For the below, I want to make sure I am using the correct numbers for the PV function, and if that is the correct function to use for this situation. I got 25 from 1,000/ 20 years = 50, then divide by 2 since its semi annual payments.
Dividend 0 Growth Rate 1 Growth Rate 2 Period 1 Length Required Return 0.35 15% 8% For this stock valuation we must value a stock with a high growth rate for the first 5 years and a lower constant growth rate from then on. High Growth Rate, first 5 years 15%, Constant growth after 8% Required Return 12%. Current dividend is $.35 12% Two-Stage Value of Stock 1st Stage Dividend Two-Stage Value of Stock 2nd Stage pv D6 P5 - Discounted to today First five years 3 TOTAL Stock Price Bond Valuation Time to Maturity (Years) Coupon Rate Required Return Frequency Face Value Value each year Bond Valuations This bond has 20 years to maturity Coupon rate Current required return 9.00% Semi Annual interest payments Par value $1,000.00 8.00% 20 -PV(0.08, 20,-25, 1000,0) 18 16 14 12 10 Find the value of this bond for each of the years to maturity listed Why does the value of the bond continue to increase over time? Is this bond currently selling for a premium or a discount
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