Use the following information to answer the two questions below.

Josiah Trampolines, Inc. will soon be offering a new issue of corporate bonds. The issue will offer a coupon rate of 12.5% paid semi-annually and maturing in 30 years with a face value of $1,000. The yield on similar bonds in the market is currently 10%. Josiah recently paid $6.25 per share as a dividend and expects the dividends to grow indefinitely by 3.75%. Equity Investors demand a rate of return of 8.75% on the stock.

1. Based on the information provided above, what will be the price of the bond?

A: $1,236.62

B: $2,152.93

C: $626.23

D: $2,419.70

E: None of the answers are correct.

2. Based on the information provided above, what will be the price of the stock?

A: 125

B: 129.69

C: -74.12

D: 71.42

E: None of the answers are correct.