SHOW WORK AND EXPLAIN ANSWER
1.) Suppose you're given with the following information for some assets; a 10-year 2.0%-coupon bond of semi-annual coupon payment with face value as $1,000, a common stock of $3.60 expected dividend with 2.5% growth rate currently. Both bond and common stock are issued by Company M&M. Answer the following questions.
a) Suppose the yield to maturity (that is, the discount rate) for the bond is 10%, what is the present value of this coupon bond?
1) $435.67
2) $501.51
3) $738.9
4) $583.20
5) none of the above