1.(Bond valuation) Calculate the value of a bond that matures in 10 years and has a $1,000 par value. The annual coupon interest rate is 9 percent and the market's required yield to maturity on a comparable-risk bond is 15 percent. What would be the value of this bond if it paid interest semiannually?

2.(Yield to maturity) Settles Co.'s bonds mature in 15 years and pay 8 percent interest annually. If you purchase the bonds for $1,175, what is their yield to maturity?

3. (Common stock valuation) Foster Motor, Inc., paid a $3.75 dividend last year. If Foster's return on equity is 24 percent, and its retention rate is 25 percent, what is the value of the common stock if the investors require a 20 percent rate of return?

4. (Common stock valuation) Redford, Inc.'s outstanding common stock is currently selling in the market for $33. Dividends of $2.30 per share were paid last year, return on equity is 20 percent, and its retention rate is 25 percent.

• What is the value of the stock to you, given a 15 percent required rate of return?
• Should you purchase this stock?