Question 1 (8 marks) A particular company currently has sales of $250 million; sales are expected to grow by 20% next year. For the year after next year, the growth rate in sales is expected to equal 10%. Over each of the next 2 years, the company is expected to have net profit margin of 8% and a payout ratio of 50%, and to maintain the common stock outstanding at 15 million shares. The stock always trades at a P/E of 15 times earnings, and the investor has a required rate of return of 20%. Find the stock value in year 1 and 2 by using the P/E multiple. (8 marks) Question 2 (14 marks) A 1090, 25-year bond has a par value of $1,000 and a call price of $1,075. (The bond's first call date is in 5 years.) Coupon payments are made semiannually. It is currently being priced in the market at $1,200 a. Find the current yield b. Find the YTM (yield to maturity) c. Find the YTC (yield to call) d. Which of these three yields is the highest? Which is the lowest? Which yield would you (1 mark) (3 marks) (4 marks) use to value this bond? Explain. (6 marks)