(a) The YTM on a bond is the interestrate you earn on your investment if interest rates don't change. If you actually sell the bond before it matures, your realised return is known as the halding period yeld (HPY). Suppose that today you buy an annual coupon bond with a coupon rate of 8.2 percent for 9910 . The bond has 7 years to matudty and a par value of 1,000. REQUIRED: i. Calculate the rate of return you expect to earn on your investment. 5 marks i. Two years from now, the YTM on your bond has declined by 1 percent, and you decide to sell. What price wil your bond sell for? 3 marks ii. What is the realised aturn (HPY) on your investment? 5 marks (b) Viality pic is consideding a project that will result in inifial after-tax cash savings of 26.5mili in at the end of the first year, and these savings will grow at a rate of 3 percent per year indefinitely. The firm has a target debt-equity ratio of 0.64, a cost of equity of 13.4 percent, and an afler-tax cost of debt of 5.9 percent. The cost-saving project is somewhat riskier than the usual project the frm undertakes; management uses the subjective approach and applies an REQUIRED: i. Calculate the required return for the project. i. What is the maximum cost the company would be willing to pay for this project? 3 marks (c) Complexity Plc imposes a payback culoff of three years for its international investment projects. Assume the company has the following two projects available. REQUIRED: i. Calculate the payback period for each project. 4 marks i. Discuss the main disadvantages of the payback period method in the context of the two projects above. 6 marks (d) Discuss the disadvantages of using the dividend growth model to estimate the cost of equily. 3 marks