(solution) Use the appropriate factors from Table 6-4 or Table 6-5 to answer

(solution) Use the appropriate factors from Table 6-4 or Table 6-5 to answer

Use the appropriate factors from Table 6-4 or Table 6-5 to answer the following questions. (Use appropriate factor(s) from the tables provided. Round the PV factors to 4 decimals.)

  
 

Required:
a.

Spencer Co.’s common stock is expected to have a dividend of $4 per share for each of the next 12 years, and it is estimated that the market value per share will be $126 at the end of 12 years. If an investor requires a return on investment of 12%, what is the maximum price the investor would be willing to pay for a share of Spencer Co. common stock today? (Round your intermediate calculations and final answer to 2 decimal places.)

   maximum price:

      
 

b.

Mario bought a bond with a face amount of $1,000, a stated interest rate of 8%, and a maturity date 11 years in the future for $985. The bond pays interest on an annual basis. Three years have gone by and the market interest rate is now 10%. What is the market value of the bond today? (Round your intermediate calculations and final answer to 2 decimal places.)

   market value:

      
 

c.

Alexis purchased a U.S. Series EE savings bond for $400, and 12 years later received $884.37 when the bond was redeemed. What average annual return on investment did Alexis earn over the 12 years?

   alexis?s average annual return on investment: