1)Calculate the yield to maturity, current yield, and capital gains yield for a 12% coupon bond, with semi-annual coupons, face value of $1,000, 15 years to maturity, and a price of $1,110.

Yield to Maturity:

Current Yield:

Capital Gains Yield:

2)Smith Company recently issued a bond with semi-annual compounding,The price of the bond today is $985 and the market interest rate on bonds of similar risk is 7%.The bond matures in 8 years.What is the coupon rate (expressed in annual terms).

3)ABC Company plans on increasing its annual dividend by 6% percent, 5%, and 4% at the end of the next three years.After that, growth is expected to slow to a constant rate of 2% per year.The company just paid its annual dividend in the amount of $3.00 per share. What is the current value of one share of this stock if the required rate of return is 12 percent?

4)Martin, Inc. is considering a project that costs $500 and returns $225 per year for 3 years.The cost of capital for Martin is 8%.What is the Profitability Index for this project?Should the project be accepted?Explain.