1. A firm does not pay a dividend. It is expected to pay its first dividend of $0.22 per share in three years. This dividend will grow at 7 percent indefinitely. Use an 8 percent discount rate.
2. Suppose that a 8% semi-annual coupon bond with a time to maturity of 12 years and a par value of $100 has a price of $108.0292. This bond is first callable in 6 years at a redemption price of $106. What is the yield to maturity for this bond? What is the yield to first call for this bond? You will need to use Excel for this problem.
3. If megans tuition, fees, and expenditures for books this year total $22,000, what will they be during her senior year, assuming costs rise 4 percent annually?