Question 4 (20 marks) a) Bryceton, Inc. has bonds on the market with 10 years to maturity, a yield-to-maturity of 2 percent, and a current price of $895.09. The bonds make semiannual coupon payments. (1)What is the amount of the semiannual coupon payment? (8 marks) (2) What is the annual coupon rate? (2 marks) b) A firm announced today that it will begin paying annual dividends next year. The first dividend will be $0.12 a share. The following dividends will be $0.15, $0.20, $0.50, and $0.60 a share annually for the following 4 years, respectively. After that, dividends are projected to increase by 4 percent per year. How much are you willing to pay to buy one share of this stock today if your desired rate of return is 8.5 percent? (10 marks)

a) Bryceton, Inc, has bonds on the market with 10 years to maturity, a yield-to-maturity of 2 percent, and a current price of $895.09. The bonds make semiannual coupon payments. (1) What is the amount of the semiannual coupon payment? (8 marks) (2) What is the annual coupon rate? ( 2 marks) b) A firm announeed today that it will begin paying annual dividends next year. The first dividend will be $0.12 a share. The following dividends will be $0.15,$0.20,50.50, and $0.60a share annally for the following 4 years, respectively. After that, dividends are projected to increase by 4 percent per year. How much are you willing to pay to buy one share of this stock today if your desired rate of return is 8.5 percent? (10 marks)