a) Lewis is considering purchase of five- year Tshs 50,000 value bond carrying coupon rate of 7% p.a. Lewis required rate of return is 8% p.a. Determine the amount that Lewis can pay now to purchase the bond if it matures at par.

b) Annie is considering purchase of 10% Tshs 10,000 preference shares redeemable after 10 years. On maturity, the value of preference shares will be redeemed at a premium of Tshs 5,000 above nominal value. Annies required rate of return is 11%. What would be the price that Annie would be willing to pay for the preference shares?

c) Bob intends to buy an equity share and hold it for 1 year. He expects to receive dividend of Tshs 500 in the next year and he expects the selling price of the share to be 3,000 at the end of the year. The required rate of return is 15 per cent. What amount should Bob pay today for acquiring the share?