1. Your wish to buy a home in Guelph. Your real estate agent assesses that to purchase a house in Guelph it would take payments of approximately $1,800 per month over 30 years at the 5 percent APR interest (with monthly compounding). What is the value of the mortgage with these terms? (20 MARKS) 2. Calculate the expected price of a stock given that the most recent dividend was $3.20. Dividends are expected to grow at a 15% rate for the next three years (i.e., t=0 to 1,t=1 to 2 , and t=2 to 3 ), after which they will permanently grow at a constant rate of 4%. The required return on the stock is 12\%. (25 MARKS) 3. At t=0 you buy a bond that has 4 years to maturity and pays annual coupons at a coupon rate of 5% on a par value of $1,000. At t=0 the bond trades at a yield-to-maturity of 10%. In one year (t=1), you receive the first coupon payment and immediately sell the bond. At t=1, the bond (with 3 years remaining) still trades at a yield-to-maturity of 10%. What is the capital gain in percentage terms and the net gain in percentage terms from the sale of the bond over the one-year period (i.e., from t=0 to t=1 )? (20 MARKS) 4. Are ther differences in tax treatment between bond coupons and stock dividends from the point of view of buyer of securities? How is each income source taxed? Explain. (15 MARKS) 5. Assume that TNT Inc. will sell a truck of widgets for $95,000 in four years, i.e., at time t=4. The widgets cost $57,000 to produce at t=0 (today). The discount rate on the widgets is 14 percent per year. Will TNT Inc. make a profit on this investment? If not, what is the dollar value of the loss? What should the discount rate be for TNT Inc. to break even? (20 MARKS)