2. The U.S Treasury issued a $1,000 par, 10-year bond that has a yield to maturity of 3.5%. The bond has no coupon payments. Calculate the price of this zero-coupon bond.

3. Suppose that a 3-year, zero-coupon bond with a face value of $10,000 is currently trading at $8,250. Calculate the bonds yield to maturity.

4. River Street, Inc. currently pays a dividend of $2.50 per share. The firms cost of equity capital is 10%, and dividends are expected to grow at 6% per year for the foreseeable future (i.e. forever). Based on this information, what is the value of the firms stock today? What is the value in five years?

5. Cheap & Safe Fuel Energy, Corp. just paid a dividend of $ 3.75 per share. The firms dividend is expected to grow at 20% for the next five (5) years. After that the growth rate is expected to be 6% forever. If investors require a return of 8% for investing in the stock of companies of similar risk, what is the value of the stock?