a) ABC Company is issuing an issue of bonds with a 15-year maturity, a $1,000 par value, and a 10 percent coupon rate. Today, the going rate of interest on bonds such as these is 12 percent. In your opinion, what is the appropriate selling price for this bond?

(b) You are thinking of buying a share of ABC Company. You expect this company to pay dividends of $1.00, $1.15, $1.20 and $1.25 in Years 1, 2, 3 and 4, respectively, and you expect to sell it at a price of $20 at the end of 4 years. Assuming your expected rate of return is 10%, what price are you willing to pay for this stock?

(c) At year-end 2020, total assets for XYZ Company were $1.2 million and accounts payable were $375,000. Sales, which in 2020 were $2.5 million, are expected to increase by 25 percent in 2021. Total assets and accounts payable are proportional to sales and that relationship will be maintained. XYZ Company typically uses no current liabilities other than accounts payable. Common stocks amounted to $425,000 in 2020, and retained earnings were $295,000. XYZ Company plans to sell new common stock in the amount of $75,000. The firms profit margin on sales is 10 percent; 50 percent of earnings will be paid out as dividends You are required to forecast XYZs additional funds, by using the AFN formula, needed for 2021.