economics

1-A 30-year bond has a face value of $1,000 and a coupon rate of 6% per year,

interest payments are paid semiannually. If the maturity from now is exactly 10

years and the current market rate for the same bond is 2% per year, compounded

semiannually

A) How much is the bond worth now?

B) If the current market rate is 2% today how much does the bond worth today)

Everything stays the same as above)?

2-How much can an investor afford to invest now on a project if he can receive a

lump sum of $95,000 from this investment four years from now? The investor's real

MARR is 10% per year and the inflation rate is 4% per year?

3-If you invest a certain amount of money today, you can profit $250,000 exactly 5

years from now. The investment pays an annual market interest rate of 10% based

on the expected annual inflation rate of 4%. Assuming the real rate stays the same,

how much do you need to invest today to earn that $250,000 five years from now,

if the expected rate drops to 2%?

4-An IRS classified 5-year assets costs $10,000 to be installed in service with a

salvage value of $3,000. Using MACRS Table below, how much is its book value for

tax purpose at the end of the 3'd year (immediately after the 3rci year's depreciation

was deducted from the basis)?

5-A new machine has a first cost of $150,000 and maximum useful life of 7 years

using the following salvage value and annual operating cost schedule and 15%

MARR, calculate this machine's economic service life in years?

Year Salvage Value $ AOC, $ per year

1 100000 70000

2 80000 80000

3 60000 90000

4 40000 100000

5 20000 110000

6 0 120000

7 0 130000

6-Company's x stock are currently traded at $75 per share. it is estimated by

brokers that company X will issue annual dividends a $ 5.00 per share and the

annual growth rate of company X would be 5%. Based upon this info, what is the

expected annual rate of return for company X’s stock?