1. You are called in as a financial analyst to appraise the bonds of Olsens Clothing Stores. The $1,000 par value bonds have a quoted annual interest rate of 9 percent, which is paid semiannually. The yield to maturity on the bonds is 8 percent annual interest. There are 15 years to maturity. Use Appendix B and Appendix D for an approximate answer but calculate your final answer using the formula and financial calculator methods. a. Compute the price of the bonds based on semiannual analysis. (Do not round intermediate calculations. Round your final answer to 2 decimal places.)

Bond Price____ b. With 10 years to maturity, if yield to maturity goes down substantially to 6 percent, what will be the new price of the bonds? (Do not round intermediate calculations. Round your final answer to 2 decimal places.) New Bond Price____

2. BioScience Inc. will pay a common stock dividend of $5.60 at the end of the year (D₁). The required return on common stock (K_e) is 19 percent. The firm has a constant growth rate (g) of 12 percent. Compute the current price of the stock (P₀). (Do not round intermediate calculations. Round your answer to 2 decimal places.) Current Price____