(a) Assume that the current dividend per share of a company is $0.50. The dividend of...

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(a) Assume that the current dividend per share of a company is $0.50. The dividend of the company has been growing at 12% per annum in recent years, a rate expected to be maintained for a further 3 years. It is then envisaged that the growth rate will decline to 6% per annum and will remain at that level indefinitely. Determine the share price if the required rate of return (discount rate) is 14%. Show your working clearly. (15marks) (b) A company issued eleven-year bonds one year ago at a coupon rate of 7.5%. The bonds have a face value of $150,000 and make semi-annual payments. If the yield-to-maturity (discount rate) on these bonds is 8.6%, what is the current bond price? Show your working clearly. (15 marks) (a) Assume that the current dividend per share of a company is $0.50. The dividend of the company has been growing at 12% per annum in recent years, a rate expected to be maintained for a further 3 years. It is then envisaged that the growth rate will decline to 6% per annum and will remain at that level indefinitely. Determine the share price if the required rate of return (discount rate) is 14%. Show your working clearly. (15marks) (b) A company issued eleven-year bonds one year ago at a coupon rate of 7.5%. The bonds have a face value of $150,000 and make semi-annual payments. If the yield-to-maturity (discount rate) on these bonds is 8.6%, what is the current bond price? Show your working clearly. (15 marks)