2. Sun Enterprises Inc (SEI) issued a thirty-year bond exactly ten years ago with a par value of $500 million. SEI has 20,000 outstanding shares of common stock that pays a current dividend of $4.00 per share.

A. Determine the market price of the bond if the coupon rate is 8.7% and the yield to maturity is now 7.3%.

B. Describe the manner in which a ratings agency would assign credit default risk levels to the SEI bond.

C. Determine the market price of the common stock if SEIs dividends are expected to grow by 5.2% and the required return on the common stock is 17.3%.

D. Moon Enterprises is a competitor of SEI and does not pay a dividend. Explain how an investor could estimate the fair market price of Moon Ent using a well-developed financial theory.