Question
a)You expect the price of MU Corporation stock to be $45 in 5 years. You also expect dividends to increase at an annual rate of
a)You expect the price of MU Corporation stock to be $45 in 5 years. You also expect dividends to increase at an annual rate of 10 percent from the most recent dividend of $1.00. If your required rate of return is 15 percent, how much are you willing to pay for Mu Corp's stock?
b)A zero-coupon bond is selling for $476. The bond has a face value of $1,000 and matures in 8 years. Your friend asks you if he should buy the bond. He tells you his required return is 9 percent. Would you recommend he buy the bond or not? Explain your answer.
(Can I please get the answer with the workings)
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