a. A firm pays a dividend today of $6. Their income statement for the year shows revenues of $400,000 and total expenses of $250,000. They have 1 million shares outstanding, which were initially issued at $2 each, and are currently trading at $4. Assuming the firm typically pays out 1/3 of its income as dividends, what will the dividend be 6 years from now?

b. What would be the price of the stock today if dividends are expected to grow at 11% annually for the next three years, then grow at a constant rate of 4% annually forever? Assume the company paid a $3 dividend today and that investors require a 9% annual rate of return on the stock.

c. 3 years ago, Helen bought a 5-year, 10% semi-annual coupon bond for $800. She sold the bond today for $750. What is the rate of return assuming she re-invested these coupons at a rate of 2%?