Eric Inc. just paid a $5.00 dividend. Due to a new product about to be released, analysts expect the company to grow at a supernormal rate of 15% for three years. After that it is expected to grow at a normal rate of 4% indefinitely. Stocks like Genestek are currently earning shareholders a return of 12%. The estimated selling price of the stock is:

a. $76.56

b. $86.10

c. $83.43

d. $91.14

19. Marshall Industries has a bond outstanding that has a $1,000 par value and a market price of $1,322. The bond has 25 years remaining to maturity. Assuming an annual market interest rate of 8% and that the bond pays interest semiannually, calculate the annual coupon rate on the bond. (Round to nearest whole percentage)

a. 5%

b. 7%

c. 9%

d. 11%

e. 13%

18. You are considering the purchase of an AT&P bond with a 13% coupon rate. Interest is paid and compounded semiannually. The bond will mature in 8 years and has a $1,000 face value. The bond currently sells for $867. Calculate the annual yield to maturity for this bond. (Round to nearest percentage)

a. 9%

b. 11%

c. 16%

d. 18%