1.) An investor buys a ten-year, 7% coupon bond for $1,050, holds it for one year and then sells it for $1,040. What was the investor’s rate of return?

2.) What is the value of the expected dividend per share for a stock that has a required return of 16%, a price of $45, and a constant growth rate of 10%?

3.) A five-year project requires an additional commitment of $100,000 in net working capital. What is the present value opportunity cost associated with this investment if the project has an opportunity cost of capital of 10 percent?

4.) You can continue to use your current machine at a cost of $8,000 annually for the next five years. Alternatively, you can purchase a more efficient machine for $12,000 plus $5,000 annual maintenance that has a five-year life. At a cost of capital of 15%, you should:

a. buy the new machine and save $3,000 in equivalent annual costs.

b. buy the new machine and save $600 in equivalent annual costs.

c. buy the new machine and save $388 in equivalent annual costs.

d. keep the old machine and save $388 in equivalent annual costs.

e. keep the old machine and save $580 in equivalent annual costs.

5.) A five-year project requires an additional commitment of $100,000 in net working capital. What is the present value opportunity cost associated with this investment if the project has an opportunity cost of capital of 10 percent?

Please Show all work for these problems. Thanks

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