One simple question but please explain the calculation! Thanks in advance!

HOME PRODUCTS, INC. Home Products, Inc. (HP') is a leading manufacturer of prescription and ethi- cal drug speciality foods and candies and proprietary drugs Important prod uct names include Advil, Anacin, Dimetapp. Norplant, and Robitussit Total revenues in the last fiscal year were in excess of billion. CASE 3 HOME PRODUCTS 17 Long-Term Debt The company has a capital structure that is made up of 34 percent long-term debt. 3 percent preferred stock, and 63 percent common stock One of the two largest domestic long-term debt issues is a percent coupon bond that is due in 26 years. This debenture is currently selling for $930. The band is callable in seven years and if called will be redeemed at a premium of 104.375. The other large publicly held bond is a percent coupon bond that is due in nine years. This debenture is selling for $72.90. Both of these bonds are rated by Moody's Preferred Stock The preferred stock is a $2.75 cumulative preferred with a stated value of $30.50, but it is currently selling for 530. More than 55 million shares were issued in February 1979 in connection with the merger of FDS Holding Company into a subsidiary of HPL The preferred stock has no voting rights unless the company is in arrears on six or more quarterly dividends, and then each shareholder is entitled to one-quarter vote per share. In the event of liqui- dation each share is entitled to 30.50 plus accrued dividends Common Stock Returns from common stock come from the cash dividend payment and/or changes in the price of the stock. Investors receiving dividends can expect them to grow over time, but some stocks do not pay dividends, especially during their early growth years. As firms mature, they typically start paying dividends and then management is very reluctant to reduce the dividend. For the firms that do not pay dividends, the normal assumption is that the camings are being retained by the firm to promote growth, thus, the stock price should grow at a higher rate than firms that have high payout ratios Two major factors that affect the price of stock are changes in the required rate of return. caused primarily by changes in the risk and change in the growth rate of earnings, which in turn create changes in the growth rate of dividends The common stock of Home Products currently has over 5 million shares of 53.125 par value stock outstanding. A share of common stock presently sells for $40% and pays a quarterly dividend of 50.385. A consensus estimate Zack's and IBES) indicates that earnings and dividends are expected to grow at an annual rate of 9.7 percent for the next five years. The common shares have no preemp tive rights Stockholders of HPT have the opportunity to buy additional shares of common stock through a plan of automatic dividend reinvestment and optional cash purchase. This plan allows stockholders to have their dividends reinvested in shares of common stock, and they can purchase additional shares at the market price (with no commission) each month. Shareholders who participate in this plan are limited to a total of $1,000 per month that they can use to purchase additional shares QUESTIONS 1. Look at the 9% percent coupon bond. What is its current yield, its yield- to-first call, and its yield-to-maturity