a) Oklam Bhds common stock is only expected to pay dividends of RM0.60 at the end of Year 2. The dividend payout ratio and the return on equity (ROE) are expected to be 40% and 20% respectively. If the required rate of return is 14%, calculate the value of Oklam Bhds common stock today.

b) Jeans Bhd had issued a 15-year bond 7 years ago. These bonds pay 6% coupon semi-annually. The face value of the bond is RM1,000. It has been given a BBB rating. Recently, an 8-year bond was issued by Satey Bhd, with the same face value. These bonds pay 8% coupon annually and are still selling at face value. The investors' required rate of return is the current yield on the Satey Bond.

i) What should be the present value of the Jeans Bond?(6m)

ii) If the Jeans Bond is selling at RM850, will you buy it? Why or why not?