To prepare funding for the investment project, Cooper Technologies Ltd issued 20year bonds to the public exactly five months ago. These bonds would pay semi-annual coupons at a rate of 14% p.a.. The rate of return required by investors on these instruments has been estimated at 12% p.a.. Each bond has a face value of $150,000. a. Calculate today's price of each bond. (3 marks) b. Consider the current term structure as follows: corporate bonds with maturity from 1 years to 5 years yield 8% p.a., corporate bonds with maturity from 6 years to 9 years yield 10% p.a., and 10-year bonds and longer-maturity bonds yield 16% p.a.. Recalculate today's price of each bond. ( 3 marks) Question 9 (6 marks) To further increase funding for the investment project, Cooper Technologies Ltd has decided to withdraw dividend payments for the next two years (i.e., year 1 and year 2). Thereafter, the company expects to maintain a payout ratio of 65% for five years (i.e., year 3 to year 7). Afterward, the company expects to increase the payout ratio to 82% and maintain it forever. The company's return on equity (ROE) is 25%. a. Calculate the annual dividend growth rate from year 3 to year 7. (1 mark) b. Calculate the annual dividend growth rate from year 7 onward. (1 mark) c. Given that the dividend per share in year 3 is $3, calculate the price of each share in today's dollar (i.e., share price in year 0). (4 marks) To prepare funding for the investment project, Cooper Technologies Ltd issued 20year bonds to the public exactly five months ago. These bonds would pay semi-annual coupons at a rate of 14% p.a.. The rate of return required by investors on these instruments has been estimated at 12% p.a.. Each bond has a face value of $150,000. a. Calculate today's price of each bond. (3 marks) b. Consider the current term structure as follows: corporate bonds with maturity from 1 years to 5 years yield 8% p.a., corporate bonds with maturity from 6 years to 9 years yield 10% p.a., and 10-year bonds and longer-maturity bonds yield 16% p.a.. Recalculate today's price of each bond. ( 3 marks) Question 9 (6 marks) To further increase funding for the investment project, Cooper Technologies Ltd has decided to withdraw dividend payments for the next two years (i.e., year 1 and year 2). Thereafter, the company expects to maintain a payout ratio of 65% for five years (i.e., year 3 to year 7). Afterward, the company expects to increase the payout ratio to 82% and maintain it forever. The company's return on equity (ROE) is 25%. a. Calculate the annual dividend growth rate from year 3 to year 7. (1 mark) b. Calculate the annual dividend growth rate from year 7 onward. (1 mark) c. Given that the dividend per share in year 3 is $3, calculate the price of each share in today's dollar (i.e., share price in year 0). (4 marks)