1. ( 30 points) A company's bond price is $500. Consider that this bond pays annual coupons with a coupon rate of 2%. If YTM of 10%, what is the maturity of the bond? 2. (35 points) A company's stock paid a dividend of $5 per share last year. Moreover, the dividends are expected to grow at a rate of 16% per year for the first 3 years. After 3 years, the grow rate decreases to 4% and dividends grow forever. Discount rate is 10%. a. What is the price of the stock today? b. If the earnings per share will be $8 in year 1 , what is the present value of growth opportunities? 3. (35 points) Consider the following two mutually exclusive projects: Whichever project you choose; you require a 11 percent return on your investment. a. If you apply the payback criterion, which investment will you choose? b. If you apply the NPV criterion, which investment will you choose? c. If you apply the IRR criterion, which investment will you choose? (Assume that IRR for Project X is 7.93% and that of Project Y is 15.11% ). d. If you apply the profitability index criterion, which investment will you choose? e. Based on your answers in (a) through (d), which project will you finally choose