A firm issues two-year bonds with a coupon rate of 6.1%, paid semiannually. The credit spread for this firm's two-year debt is 0.8%. New two-year treasury notes are being issued at par with a coupon rate of 3.9%. What should the price of the firm's outstanding two-year bonds be per $100 of face value?

_________

Sinclair Pharmaceuticals, a small drug company, develops a vaccine that will protect against Helicobacter pylori, a bacteria that is the cause of a number of diseases of the stomach. It is expected that Sinclair Pharmaceuticals will experience extremely high growth over the next three years and will reinvest all of its earnings in expanding the company over this time. Earnings were $1.20 per share before the development of the vaccine and are expected to grow by 40% per year for the next three years. After this time, it is expected growth will drop to 6%and stay there for the expected future. Four years from now Sinclair will pay dividends that are 75% of its earnings. If its equity cost of capital is 10%, what is the value of a share of Sinclair Pharmaceuticals today?

$63.92

$39.34

$65.44

49.17

____________

NoGrowth Industries presently pays an annual dividend of $1.00 per share and it is expected that these dividend payments will continue indefinitely. If NoGrowth's equity cost of capital is 11%, then the value of a share of NoGrowth's stock is closest to:

A. $10.91

B. $10.00

C. $9.09

D. 7.27