b$)$ BuzzMart Inc. issued a $30-$year, $7\%$ coupon interest rate, $$1000$ par value

bond that pays interest semi$-$annually. The required return is currently $6\%.$

Compute the value of the bond.

c$)$ Tsuz Industries has paid a dividend of $$3\mathrm{.}50$ per share for the past year $($D$0$

$=$$$3\mathrm{.}50).$ The Chief Finance Officer expects the dividend to grow at a rate

of $5\%$ per annum for the foreseeable future. Assume investors require a rate

of return of $12\%.$

$($i$)$ Calculate the current price of the stock.

$($ii$)$ If the stock currently trades at $$53,$ would you buy it$?$

d$)$ Rainbow Airways is in the $40\%$ tax bracket. Information on the company's

debt, preferred stock and common stock are as follows:

$($i$)$ Calculate the cost of debt.

$($ii$)$ Calculate the cost of preferred stock.

$($iii$)$ Calculate the cost of common stock.

$($iv$)$ Rainbow Airways' capital structure is $20\%$ debt, $40\%$ preferred stock

and $40\%$ common stock. Calculate the weighted average cost of

capital $($WACC$).$