An issue of bonds with par of $1000 matures in 12 years and pays interest at 7% annually. The current quoted market price is $1200 and the investors required rate of return is 8%. (a) Calculate the bonds expected rate of return. (b) should the investor purchase the bond ? (Explain your answer.) 17) 4 MARKS Due to the current global economic conditions, Zoro Ltd stopped its dividend payments Dividends of $3.75 are expected to start again in five years and are expected to increase at a rate of 4% per year thereafter. If the required rate of return is 11 %, what is the current value of the firm's shares ? 18) 4 MARKS Given that a company's return on equity is 14 % and management plans to retain 30% of earnings for investment purposes. (a) Calculate the company's growth rate of future earnings (b) if the company just paid a cash dividend of $1.20, and the required rate of return is 13%, what is the value of the firm's shares ? 19) 4 MARKS A $2,000 bond with 8 years to maturity is currently selling for $2,055. If the yield to maturity is 9.5%, calculate the bond's coupon interest rate. 20) 5 MARKS The dividend for Annen's ordinary shares is expected to be $1.20 next year. This dividend is expected to grow at a rate of 6% for the following two years, after which is expected to grow at 4% each year for the foreseeable future. If the required rate of return on these shares is 12 %, what is the approximate current value of the firm's shares ? 21) 4 MARKS Natalia initially deposited $1,000 in to a savings account for five years paying 4% p.a. compounded. annually. Starting 6 years from now, she deposited $500 each year into the account, for 7 years, and the interest rate rises to 7.5 % p.a. compounded monthly What is the balance in her account at the end of 12 years?