Quick Silver Ltd is looking for a financial investment in the securities market. Two investment options are available in different securities: Bonds and ordinary shares, as noted below: Treasury Bond: the bond is paying 10% coupon rate. Interest is paid semi-annually. The bonds have a face value of $1,000 and will mature 25 years from now. Commanwealth Bank ordinary share: the share just paid a dividend of $6.50 per share. The companys Management agreed on steady growth of 5% in dividends and positive earnings over the foreseeable future. The required rate of return for shares of this type is 18%.

Required: a) Compute the current value of the Treasury Bond if the year to maturity (YTM) of the bond is 9.7% annually?

b) Calculate the current value of the Commanwealth Bank ordinary shares?