Question 1 [15 marks, 3 marks each] please use formula and working out in all answers.

a. Bright Ltd. does not expect any change in its sales or earnings in the indefinite future. The share is currently selling at $26.5. If the required rate of return is 12 percent, what is the dividend paid by this company?

b. BICS Ltd. has just paid a dividend of $5.25. The company has estimated a growth rate of 6 percent indefinitely. If the appropriate discount rate is 12 percent, what is the current price of this share?

c. GeneTech Ltd has forecast the following growth rates for the next three years: year 1, 25 percent; year 2, 20 percent; and year 3, 15 percent. After year 3, the company expects to grow at a constant rate of 7 percent indefinitely. The company paid a dividend of $1.00 recently. If the required rate of return is 16 percent, what is the market value of this share?

d. A mining company is issuing 20-year bonds that will pay coupons semi-annually. The coupon rate on this bond is 7.8 percent with a face value of $1,000. If the market rate for such bonds is 7 percent, what will the bonds sell for today?

e. An investor bought a 10-year bond that pays 8.25 percent annually for $911.10. It has a face value of $1000. What is the yield to maturity on this bond?