1. You are planning to purchase the stock of Jims Garage Company and you are expecting it to pay a dividend of $2 in 1 year, $2.75 in 2 years, and $5.00 in 3 years. You expect to sell the stock for $90 in 3 years. If your required return for purchasing the stock is 12 percent, how much would you pay for the stock today? Select one:

a. $85.66

b. $71.60

c. $77.24

d. $75.45

2. A company has issued $1,000 par value bonds with a 10 percent stated interest rate. The bond pays interest annually and has 15 years remaining until it matures. If bonds of similar risk are currently earning 9 percent, the firm's bond will sell for ________ today. Select one:

a. $1,000

b. $1,080.61

c. $716.67

d. $1,123.33

3. Airnet Auto Corporation issued bonds with a coupon rate of 12 percent, pay coupons semiannually, have 7 years remaining to maturity, and are currently priced at $950 per bond. What is the yield to maturity? Select one:

a. 12.00%

b. 15.25%

c. 18.15%

d. 13.11%

4. Calculate the current price of a $1,000 par value bond maturing in 10 years with a coupon rate of 12 percent, paid semiannually, that has a YTM of 15 percent? Select one:

a. $604

b. $847.08

c. $1,090

d. $1,073