(Require formula with step, financial calculator and excel are not accepted)

You have been asked to evaluate Craiglockhart Inc's bonds and stocks. Craiglockhart Inc has an outstanding issue of 1,000 par value bonds with an 8% coupon interest rate. The issue pays interest annually and has 15 years remaining to its maturity date. Bonds of similar risk are currently yielding a 10% rate of return. (Require formula with step, financial calculator and excel are not accepted) (a) What is the value of these Craiglockhart Inc bonds? (4 Marks) (b) Is the bond selling at a discount or premium, and why? (You're expected to write no more than 100 words in your answers.) (2 Marks) Craiglockhart Inc has a beta of 1.10. The risk-free rate of interest is currently 6%, and the required return on the market portfolio is 13%. The company plans to pay a dividend of 2.91 in 2021 and anticipates that its future dividends will increase at an annual rate consistent with that of the 2018-2021 period: H Year Dividend 2021 (expected) 2.91 2020 2.67 2019 2.45 A J 2018 2.25 (4 (c) Estimate the value of Craiglockhart Inc stock. Marks)+ (d) The company's stock price is 63.46 per share currently. Based upon the calculations in (c), what recommendation would you make to your client regarding the company's stock? (You're expected to write no more than 100 words in your answers.) (2 Marks)+