(a): The 10-percent-coupon-rate bonds of the M & S Company have exactly 15 years remaining to maturity. Face value of the bond is Rs.1000 and currently selling in market at Rs.800. Interest is paid semiannually. Farhan places a nominal annual required rate of return of 14 percent on these bonds. What intrinsic value should Farhan place on one of these bonds (assuming semiannual discounting)?

(b): Khalid production company currently pays a dividend of Rs.12 per share, and this dividend is expected to grow at a 13 percent annual rate for three years, and then at a 10 percent rate for the next Four years, after which it is expected to grow at a 5 percent rate forever. What value would you place on the stock if a 15 percent rate of return was required