D0 =1.62
D1 =1.62*(1+8.6%)
D2 =1.62*(1+8.6%)^2
D3=1.62*(1+8.6%)^3
D4=1.62*(1+8.6%)^4
D5=1.62*(1+8.6%)^5
D6=1.62*(1+8.6%)^5*(1+3.4%)
Terminal value =D6/(Required Rate-Growth)
=1.62*(1+8.6%)^5*(1+3.4%)/(8.1%-3.4%) =53.83774
Using dividend discount model price of bond
=1.62*(1+8.6%)/1.081+1.62*(1+8.6%)^2/1.081^2+1.62*(1+8.6%)^3/1.081^3+1.62*(1+8.6%)^4/1.081^4+1.62*(1+8.6%)^5/1.081^5+53.83774/(1.081^5)
=44.68
Procter and Gamble (PG) paid an annual dividend of $1.62 in 2009. You expect PG to...
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