a$)$ Drex Ltd has a $$100$ face value bond with a $4\mathrm{.}5\%$ coupon rate. The bond matures in $25$ years, and coupons are paid annually. The required rate of return is $6\%.$

$($i$)$ Calculate the value of the bond.

$(6$ marks$)$

$($ii$)$ Is the bond priced at a discount, par or premium? Explain.

$(2$ marks$)$

$($iii$)$ List three features that Drex Ltd could attach to this bond issue.

$(3$ marks$)$

c$)$ CuJi Inc just paid a $$2\mathrm{.}50(D_0)$ annual dividend per share. Investors believe that the dividend is expected to grow at a rate $(g)$ of $2\%$ per annum for the foreseeable future. Assume investors require a rate of return of $5\%.$

$($i$)$ Calculate the current price of the stock.

$(3$ marks$)$

$($ii$)$ If the stock currently trades at $$86,$ would you buy it$?$

$(1$ mark$)$

c$)$ TESB Corporation has the following capital structure.

$\backslash$table$[[$Debt$,\backslash$table$[[$Before$-$tax cost of debt $4\%.],[$Corporate tax rate $40\%.]]],[$Preferred Stock,$\backslash$table$[[6\%$ at par value $$20$ per share$],[$and Floatation cost $$4$ per share$]]],[$Common Stock,$\backslash$table$[[$Current price $$22$ per share$],[$Dividend next period $(D_1)$$$1\mathrm{.}50$