1. one healthcare company is expected to pay a dividend of $3.25 per share next year (t=1) and the dividend

is expected to grow at a constant rate forever. The stock is currently selling for $42. If the

required rate of return is 10 percent, what is the dividend growth rate?

2. One 6.25 percent coupon bond (par value=$1,000) with 16 years left to maturity is offered for

sale at $1,015.25. What is the yield to maturity of the bond? (Assume interest payments are

semiannual.)

3. the toy company has a current market value of $65 per share with earnings per share of $4.32.

What is the net present value of its growth opportunities if the required rate of return is 8

percent?