You require an internal rate of return of 8% to accept a project. If the project will yield $10,000 per year for 10 years, what is the maximum amount that you would be willing to invest in the project?

## What equal-annual and end-of-the-year amountYou have just had your 30th birthday. You have two children, one of which will go to college 10 years from now and require four beginning-of-the-year payments for college expenses of $10,000, $11,000, $12,000, and $13,000. What equal, annual, and end.. |

## What is the present value of the first arrangementYou've just joined the investment banking firm of Dewey, Cheatum, and Howe. They've offered you two different salary arrangements. You can have $193,000 per year for the next two years, or you can have $75,000 per year for the next two years, along w.. |

## What if rates suddenly fall by two percent insteadBond J has a coupon rate of 3 percent and Bond K has a coupon rate of 9 percent. What if rates suddenly fall by 2 percent instead? |

## Explain the default risk and liquidity premiums for bondsThe default risk and liquidity premiums for this company's bonds total 0.9 percent and are believed to be the same for all bonds issued by this company. If the average inflation rate is expected to be 5 percent for years 5, 6, and 7, what is the y.. |

## Even though most corporate bondsEven though most corporate bonds in the United States make coupon payments semiannually, bonds issued elsewhere often have annual coupon payments. Suppose a German company issues a bond with a par value of €1,000, 10 years to maturity, and a coupon r.. |

## European asset-or-nothing option that expires at timeA European asset-or-nothing option that expires at time T pays its holder the asset value S (T ) at time T if S (T ) > K and pays 0 otherwise. |

## What is the new equilibrium r in the modelWhat is the new equilibrium r in the model after the 300 expenditure for the wall? |

## What is present value of the expected yearly cash flowsHinkle Inc. expects the first three years of a proposed project would have cash flows of $320,000 a year. If Hinkle uses a discount rate of 13%, about what is the present value of the expected yearly cash flows? |

## What is the current stock pricePasqually Mineral Water, Inc., will pay a quarterly dividend per share of $1.20 at the end of each of the next 12 quarters. Thereafter, the dividend will grow at a quarterly rate of 1.8 percent, forever. The appropriate rate of return on the stock is.. |

## What will your total dividend amount be in year twoYou own 1,000 shares of stock in Avondale Corporation. You will receive a $0.80 per share dividend in one year. In two years, Avondale will pay a liquidating dividend of $35 per share. The required return on Avondale stock is 16 percent. You only wan.. |

## Aspects consumption do we care about for investment purposesWhat aspects of consumption do we care about for investment purposes? |

## Should the old riveting machine be replaced by the new oneMississippi River Shipyards is considering the replacement of an 8-year-old riveting machine with a new one that will increase earnings before depreciation from $27,000 to $54,000 per year. The new machine will cost $82,500, and it will have an estim.. |

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