Suggested Solutions to Homework 1
1. Chapter 1, Question 4 (3 points)
Financial assets make it easy for large firms to raise the capital needed to finance their
investments in real assets. If Ford, for example, could not issue stocks or bonds to the
Suggested Solutions to Homework 5
1. (5 points) The bond price will be lower. As time passes, the bond price, which is now above
par value, will approach par.
2. (15 points) a. On a financial calculator, enter the following:
n = 40; FV = 1000; PV = 950; P
Parrott Co is a UK based company. It is considering a 3-year project in Farland.
The project will require an initial investment of 81m Farland Florins (FFI) and will have a
residual value of 10m FFI.
The projects pre-tax net FFI inflows are expected to be
Case Analysis: Airbus
Professor: Laurent Frsard
Group members and UIDs:
The Investment Detective Case Questions
1. For each set of project