ASSIGNMENT 2MGF 301Corporation FinanceSpring 2011DUE: Tuesday, February 22nd at noon (12:00pm) in Jacobs 365You may in a group of up to 4 on this Assignment. Please indicate clearly on all submitted Assignments who the members of the group are. Please note, all assignments submitted with more than 4 group members will automatically receive a 0 grade. No late assignments will be accepted. You may hand in the assignment in person in Jacobs 365 (put it under the door if no one is there) or submit it by email to the link in theAssignments section of UBLearns. Note: If you use Electronic submission, please follow all the rules for UBLearns Assignment submissions in the Syllabus.________________________________________________________________________________________________________Answer all of the following questions. For each answer, show your work.1. Common Products has issued its $.001 par value stock in two separate financing transactions. Transaction 1: ten years ago, the founder of the company purchased 1,000,000 shares of stock for $200,000. Transaction 2: last year the company went publiclast year by issuing 4,000,000 shares of stock to the public for $10 million. Use this information to fill in the following table:Common shares (par value) ____________________Additional paid-in capital ____________________Retained Earnings ____________________Net Equity $12,000,0002. A $1,000 face value bond of Acme Inc. pays an annual coupon, carries a coupon rate of 6.5%, has 11 years to maturity, and sells at a yield to maturity of 5.75%.(a) What interest payments do bondholders receive each year?(b) At what price does the bond sell?(c) What is the bond price if the yield to maturity rises to 8%?3. A 30 year maturity bond with a coupon rate of 6.5% and face value of $1,000 makes semi-annual coupon payments. What is the bond’s yield to maturity if the bond is selling for:(a) 900?(b) 1,000?(c) 1,100?4. Large Industries annual bonds are selling at 92 (i.e., the price is $920 for the $1,000 bond). There are 13 years remaining until maturity on the bonds and the yield to maturityis 7%. Find the coupon rate. (Note: you may have to use a trial and error solution method)5. Below are the data for two stocks, both of which have a discount rate of 11 percent. Stock A Stock BReturn on equity 16% 13%Earnings per share $1.50 $2.50Dividends per share $ .50 $.80a. What are the dividend payout ratios for each firm?b. What are the expected dividend growth rates for each firm?c. What is the estimated stock price for each firm?d. Which stock has the higher market value of equity?6. You have forecast that United Sports, Inc. will pay a dividend of $.50 next year (in year 1) and $1 two years from now (in year 2). For dividends beyond two years, you assume they will increase at 6% per year from the prior year. If the discount rate is 10%, calculate a fair price for the stock of United Sports,