On January 31, 2022 you purchased a newly issued 5.6% coupon bond issued by the Dana Corporation for $1,023.56. The bond is noncallable and matures January 31, 2048. You decide to sell the bond April 30, 2023 when the bond’s yield to maturity was 4.82 percent. Based on a 30/360 day-count method, how much will you receive from the sale of the bond (including accrued interest)?
- On January 31, 2022 you purchased a newly issued 5.6% coupon bond issued by the Dana Corporation for $1,023.56. The bond is noncallable and matures January 31, 2048. You decide to sell the bond April 30, 2023 when the bond’s yield to maturity was 4.82 percent. Based on a 30/360 day-count method, how much will you receive from the sale of the bond (including accrued interest)?
- Consider the December 31, 2022 and 2021 balance sheet for the Jasper Company and the income statement for the year ended December 31, 2022:
JASPER COMPANY
Balance Sheets as of December 31, 2022 and 2021
|
Assets |
|
|
|
|
2022 |
2021 |
|
Cash |
$ 405 |
$310 |
|
Accounts receivable |
3,055 |
2,640 |
|
Inventory |
3,850 |
3,275 |
|
Property, plant, and equipment (net) |
10,670 |
10,960 |
|
Total |
$17,980 |
$17,185 |
|
Liabilities and |
|
|
|
|
2022 |
2021 |
|
Accounts payable |
$ 2,570 |
$ 2,720 |
|
Current portion of long-term debt payable |
0 |
100 |
|
Long-term debt |
8,100 |
7,875 |
|
Common stock |
5,250 |
5,000 |
|
|
2,060 |
1,490 |
|
Total |
$17,980 |
$17,185 |
JASPER COMPANY
2022 Income Statement
|
Sales |
$9,610 |
|
Cost of goods sold |
6,310 |
|
Gross profit |
3,300 |
|
|
1,370 |
|
Earnings before interest and taxes |
1,930 |
|
Interest expense |
630 |
|
Earnings before taxes |
1,300 |
|
Income tax expense |
455 |
|
Net income |
$845
|
- Considering the left-hand side of the cash flow identity (cash flows from assets associated with investment activities), determine Jasper Company’s
free cash flow (FCF) for the year 2022.
- Jasper Company has 1,000 shares of common stock outstanding. Under the assumption that FCF’s will grow by 2 percent into the foreseeable future, compute an estimate of the price per share based on FCF’s if investors require a 9 percent return.
- If Jasper’s current dividend is expected to grow at 5 percent into the foreseeable future, what would then be the estimated price per share?
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