***Must answer all FOUR questions, Show your work and answer each part of each question

1. (Bond valuation) Calculate the value of a bond that matures in 12 years and has a $1,000 par value. The coupon interest rate is 8 percent and the markets required yield to maturity on a comparable-risk bond is 12 percent.

2. (Yield to maturity) Golden Co.s bonds mature in 15 years and pay 8 percent interest annually. If you purchase the bonds for $1,175, what is their yield to maturity?

3. (Measuring growth) If Pepperidge, Inc.s return on equity is 16 percent and the management plans to retain 60 percent of earnings for investment purposes, what will be the firms growth rate?

4. (Common stock valuation) Franklin Motor, Inc., paid a $3.75 dividend last year. If Franklins return on equity is 24 percent, and its retention rate is 25 percent, what is the value of the common stock if the investors require a 20 percent rate of return?