1. What is the stock value? When RF=10%,b=0.8,R(Rm)=15%, and D0=$1.89,E(g)=6%. (10 points) 2. What's the YTM of a 12-year bond, which was sold for $2,450, assuming that the par value is $2,000, and the stated rate is 11%. (10 points) 3. If E(D3)=$5.60,P2=$32.74, and E(g)=7%, what is the stock's expected rate of return? What is the expected stock price (value) at the end of Year 3 ? ( 20 points) 4. What is the value of a 14-year, annual coupon rate of 12% bond with $5,000 par value if interest rate =8% ? What is the current yield for the bond? ( 20 points) 5. HCA Health System has a target capital structure with 35% debt. Your boss gave you the following information and wanted you to calculate the system's CCC for your boss. - The system's tax rate is 35% - The system's common stock currently sells for $52 per share, and is expected to pay a dividend of $4.2 at year end and the dividend is expected to grow at a constant rate of 6% per year. - The before-tax YTM on the bonds is 8% What is the system's CCC? (20 points) 6. HCA clinic needs an equipment that costs $2 million. They are considering either purchase or lease the equipment. The equipment falls into the three-year class and the savage value will be around $50,000. The MACRS allowance are: 33%,26%,22%, and the remainder for last year. If they purchase the equipment, they will need to borrow $2 million from the local bank for the purchasing and the annual interest rate will be 8% for the loan. HCA clinic has a tax rate of 40%. If they lease the equipment, their payment would be $580,000 for each year, payable at the beginning of each year. With your calculation, should HCA clinic purchase or lease the equipment? (20 points)