a$)$ Four years ago, the Zuri Corporation issued an $8\%$ coupon $($paid semi$-$annually$),$

$20-$year AA$-$rated bond at its par value of $$1000.$

Currently, the yield to maturity on these bonds is $10\%.$

Calculate the price of the bond today

show full working

b$)$ Assume that there is a bond on the market priced at $$850$ and that the bond comes with a face value of $$1,000($a fairly common face value for bonds$).$

On this bond, yearly coupons are $$150.$ The coupon rate for the bond is $15\%$ and the bond will reach maturity in $7$ years.

Calculate the Yield to Maturity $($YTM$).$

c$)$ The Growing Rapid Company is expected to pay a dividend of $$1\mathrm{.}00$ at the end of this year. Thereafter, the dividends are expected to grow at the rate of $25\%$ per year for

$2$ years, and then drop to $18\%$ for $1$ year, before settling at the industry average growth rate of $10\%$ indefinitely.

If you require a return of $16\%$ to invest in a stock of this risk level, how much would you be justified in paying for this stock?