a.Blossom Corp., a U.S. company, has a five-year bond whose yield to maturity is 8.3 percent (assume semiannual compounding). The bond has no coupon payments. What is the price of this zero coupon bond?(Round answer to 2 decimal places, e.g. 5,275.25.)

Price of zero coupon bond $_____________________

b.Ted McKay has just bought the common stock of Cullumber Corp. Management of Cullumber expects the company expects to grow at the following rates for the next three years: 45 percent, 40 percent, and 30 percent. Last year the company paid a dividend of $2.60. Assume a required rate of return of 11 percent.

Compute the expected dividend for the first year.(Round answer to 2 decimal places, e.g. 15.25)

D_{1 $_________________________}

c.Ted McKay has just bought the common stock of Blossom Corp. Management of Blossom expects the company expects to grow at the following rates for the next three years: 30 percent, 25 percent, and 15 percent. Last year the company paid a dividend of $2.00. Assume a required rate of return of 10 percent.

Compute the expected dividend for the first year.(Round answer to 2 decimal places, e.g. 15.25)

D_{1 $_________________________}

Compute the expected dividend for the second year.(Round answer to 2 decimal places, e.g. 15.25.)

D_{2 $_________________________}

Compute the expected dividend for the third year.(Round answer to 2 decimal places, e.g. 15.25.)

D_{3 $_________________________}

Compute the present value of these dividends if the required rate of return is 10 percent.(Round answer to 2 decimal places, e.g. 15.25.)

Present value _{$_________________________}

d.Cullumber Manufacturing Company has been growing at a rate of 8 percent for the past two years, and the CEO expects the company to continue to grow at this rate for the next several years. The company paid a dividend of $1.50 last year. If your required rate of return is 13 percent, what is the maximum price that you would be willing to pay for this company's stock?(Round intermediate calculation and final answer to 2 decimal places, e.g. 15.25.)

Maxiumum price $_______________________

e.Blossom Corp. has been selling electrical supplies for the past 20 years. The company's product line has changed very little in the past five years, and the company's management does not expect to add any new items for the foreseeable future. Last year, the company paid a dividend of $4.10 to its common stockholders. The company is not expected to increase its dividends for the next several years. If your required rate of return for such firms is 12 percent, what is the current value of this company's stock?(Round answer to 2 decimal places, e.g. 15.25.)

Current Value $__________________