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1) The current zero-coupon yield curve for risk-free bonds is as follows maturity (years) 1 2 3 4 5 YTM (%) 4.95 5.55 5.77 5.93

1) The current zero-coupon yield curve for risk-free bonds is as follows

maturity (years) 1 2 3 4 5
YTM (%) 4.95 5.55 5.77 5.93 6.07

What is the price per $100 face value of a two-year, zero-coupon, risk-free bond?

2) Assume Evco, Inc. has a current stock price of $51.14 and will pay a $1.85 dividend in one year; its equity cost of capital is 19%. What price must you expect Evco stock to sell for immediately after the firm pays the dividend in one year to justify its current price? $

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