QUESTION 4

4) i) Suppose UPSA Lad., in noed of finding to hurld a new student howiel isrued Giles0 bonds with 24% annual coupon, and 10 years maturity. An alternative bond with similar risk level is however, offering 26%. What should be the value of the bond?

ii) How much should the bond sell (value) aner two years of the issue if payment is made on semi-annual basis?

b) Alani Plo, announced a dividend of GIlEt-30 per share last yeur, and planned to increase itat the rate of 8%, for the nest 4 yeurs, thereafter id increase it m the mie nf 3% indefinitely. If an alerative investment avenue posts a return of 10%, what should be the intrinsie value of the company's shares based on this announcement?