Please show step by step manually in paper with the formula as well.

ions Slide Show Review View Q Tell me 's -: ray-my vb. AV v v V : :' 7:: "- * x K' "* A3 ' s? "' A. " 3 :- :- E E 11' v [u Conv-rlto Picture Shlpu "T ' . .39; Homework #4: Bond and Stock Valuations 1. A 20-year bond has a face value (principal) of $1,000 and an annual coupon rate (APR) of 6%, but It pays interest month. The bond is always traded at par. (A) (20 pints] if you invest $500 in the bond. how much is the principal you are entitled to? (B) (20) how much interest would you be able to accumulate ill1M\" you could re-invest every interest payment back to the bond? 2. Assume that the current price of a stock could be expressed as D]. So: (r-y)' where r is the discount rate and g is the dividend growth rate. A- (20 points] If D1= $1. 7' = 10%, and g = 5%, what is the current stock price (50)? B. (20) what is the stock price at the end of year 5? ' C. (20) At the end of year 5, investors suddenly become more optimistic about the company and revise their expected annual rate of return on the stock (i.e., r) from 10%- to 8% on a permanent basis. If dividends continue Its original path of 5% annual growth , .. rate, what is the appropriate stock price at the end of year 5? . , . l, Frank Sung l'nr Rutgers Business School