Question: An ordinary share that is expected to pay a dividend of 5 next year with dividend growth expected to be 3% per annum thereafter. A

An ordinary share that is expected to pay a dividend of 5 next year with dividend growth expected to be 3% per annum thereafter.

A corporate bond with an annual coupon rate of 5%, par value of 100, and maturity in 4 years' time. If the required return on similar US equities is 10% and on similar US bonds is 5%, calculate the value of the US stock and the US bond.

I am unsure how to approach this mock exam question. Any help would be greatly appreciated.

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