1. Etling Inc.'s dividend is expected to grow at 7% for the next two years and then at 3% forever. If the current dividend is $3 and the required return is 16%, what is the price of the stock?
a. $25.10
b. $26.15
c. $27.58
d. $25.54
e. $29.45
2. This morning, Alicia bought a ten-year 6% coupon bond that pays interest semi-annually. She paid $994 for a $1,000 bond. If the market interest rate on this type of bond declines to 5.5% tonight, how much will Alicia receive for her first interest payment?
a. $60.00
b. $35.00
c. $69.58
d. $30.00
e. $65.00