1. Ikea announced today that the company will begin paying annual dividends. The first dividend will be paid next year in the amount of $0.40 a share. The following dividends will be $0.60, $0.85, and $1.00 a share annually in years two to four, respectively. After that, dividends are projected to increase by 2% per year, starting in year five. How much are you willing to pay to buy one share of this stock today if your desired rate of return is 10%? A. $10.70 B. $10.89 C. $11.11 D. $11.17 E. $11.23

99. What would you pay for a share of Magic Corporation stock today if the next dividend will be $2 per share, your required return on equity investments is 12%, and the stock is expected to be worth $110 one year from now? A. $95 B. $100 C. $110 D. $115 E. $120

2. A $1,000 face value 5-year zero coupon bond is selling at par. What is the YTM if the market interest rate is 7%? A. $.39 B. $3.86 C. $38.62 D. 7% E. $1,038.62