How much should you pay for a 10 % annual coupon bond, with a $1,000 face value, which matures in 3 years?

Assume a required return of 5%.

A. $1136.16

B. $136.16

C. $863.84

D. $1000

5. What is the value of a stock that expects to pay a $5.00 dividend next year, and then increase the dividend at a rate of 3% per year, indefinitely? Assume a 8% expected return.

A. $125

B. $100

C. $166.7

D. $62.5