a)Which is the intrinsic value of a bond, issued in the past with 3 years to maturity, 1000 face value and coupon rate 7%, if the coupon payments are annual and todays bond issues yield 9%?

B)Firm ABC plans to issue a new preferred stock in order to finance an investment project. The stock will be sold at its par value which is 100. The annual dividend of the preferred stock will be 15% of its par value. The firm estimates that the flotation costs will be 2.5% of its par value. Calculate the cost of the preferred stock.

c)You are considering acquiring a common stock that you would like to hold for one year. You expect to receive both 1.25 in dividends and 32 from the sale of the stock at the end of the year. The maximum price you would pay for the stock today is _____ if you wanted to earn a 10% return (two decimals no rounding).