Question:Question:Question:SOLVE QUESTION "b." ONLY!!!!!!! THANK YOU. Show work and EXPLANATION!!!!!!! Thank You!!

5. You are given with the following information statements of a public firm Benny in the airline industry concurrently. (Notice that all negative numbers are parenthesized). The firm has issued 12 million shares of common stock with current market price as $55/per share, the expected dividend is $6.90/per share with 3.2% growth rate, 300,000 shares of preferred stocks with promised preferred dividend and preferred stock price as $3.20/per share and $14.5/per share, respectively. The firm also has currently, 2 million 4.2%-coupon bonds with $1,000 face value that pays the couponssemi-annually. The current bond price is $820/per bond. The bonds are expected to mature at 2025. Answer the following questions:

a) If using the market prices for assessment on rates of return, what is the rate of return the common stock of Benny? What is the rate of return for their preferred stocks?

Return on common stock

55 = 6.90/(return - 3.2%)

=> Return on common stock = 15.75%

Return on Preferred stock = 3.20/14.5 = 22.07

b) What is the bond's yield to maturity of the firm's corporate bond?

Balance Sheet (in millions)

2013 20142015

Assets

Cash 3010 473

Marketable securities 1001000

Accounts Receivable920 150800

Inventory310178450

Plant, Building, and Equipment's (net)187220021209

Investments in affiliates030329

Total Assets 323224703261

Liabilities

Short-term debts 507 930

Advances from customers 11134134

Accounts payable 285192771

Interest payable 759862

Tax payable 127147128

Other Accrued Expenses 201535

Bonds payable 925 686750

Stockholders' Equity

Common stock 102110551175

Additional paid-in capital 7415647

Retained earning 87 78129

Total liabilities and equities 323224703261

Income Statement(in millions)

2013 20142015

Net Sales326633383933

Cost of Goods Sold211519792510

Selling and General Expenses700812759

Depreciation Expense160298284

Interest Expense90109121

Income Tax Expense195137254

Net Income 6 35