3. Discount Rate for Risky Cash Flow Consider a risk-free bond and a stock. The bond has no coupons and will deliver a face value of $100 in year 1. The stock has no dividends, and its price in year 1 will be either $120 or $80 with a 50% chance of each outcome. (a) The current price of the bond is $95. What is the risk-free rate? (b) What is the expected future price of stock in year 1? (Hint: To find the expected future price, we multiply each price outcome by the corresponding probability and sum across different outcomes.) (c) Because of its risk, the stock currently sells for $88, lower than the bond price. What is the equity cost of capital (required return on stock)