1. SpinCo. is considering a new investment in a 3 year project to manufacture and sell turntables. The firm believes it can sell turntables for $900 each and manufacture them at a variable cost per unit of $400 excluding depreciation expense. The estimated annual SG&A costs for the project are $1 million excluding depreciation expense. The project will require an upfront investment in new fixed assets of $6 million. SpinCo. will depreciate these assets on a straight line basis over the 3 year life of the project. SpinCo. expects to sell the fixed assets at the termination of the project for a salvage value of $1 million. The project is expected to require operating capital investments of $500k per year in years 1, 2 and 3. SpinCo. expects to recapture all of its operating capital investment at the termination of the project. SpinCo. has a 30% tax rate and requires a return of 12.19% on any new investments. The firm believes it can sell 10,000 turntables per year. (20 points)

1. What is the proposed project's Net Present Value?

2. What is the proposed project’s Profitability Index? (2 decimal places)

3. Is the project’s IRR greater than or less than 12.19% (please circle or highlight your answer)

You buy a 20-year, 6.3% Treasury bond that is quoted at 101.19.

A. What is the yield to maturity on this bond?

B. If, 4 years later, the bond is selling to yield 5.6%, what would be your percentage return if you then sold the bond?

The owner of a small business borrowed $300,000 today (year 0) with an agreement to repay the loan with equal quarterly payments over a five year time period. If the interest rate is nominal 24% per year compounded quarterly, his loan payment each quarter is equal to:

A. $109,275

B. $71,220

C. $26,154

D. $19,938

Marmaduke was in a combat zone from January 1 to April 15. During the year, the military paid $200 each month for her students loan. How much of that is taxable.

A $0

B $1200

C $1600

D $2400.

The table below reflects the actual and structural budget deficit as a percentage of GDP.

a. Graph the above data with “years” in the horizontal axis, and “deficit as % of GDP” in vertical axis.

b. From 2010 to 2014 the actual budget deficit is above the structural budget deficit. Explain why.

c. From 2016 to 2018 the actual budget deficit is below the structural budget deficit. Explain why.

d. Which period was the fiscal policy contractionary?

e. Which period was the fiscal policy expansionary?

suppose the nominal interest rate on a bank's savings account is 7% per year. if the inflation rate for the year was 2%, then the real interest rate is

select one:
a. -5%
b. 5%
c. 9%
d. 14%

If you bought a 10-year bond issued by Delta, with a par value of $1,000 and a coupon interest rate of 6%. At maturity you will receive

• A. $60.
• B. $600.
• C. $1,000.
• D. $1,600.
• E. More information would be required to answer the question.

2) A 30 year $100, 000 loan with i = 9% is to be paid off with yearly payments beginning one year after the loan is made. The first 20 payments are K and the last 10 payments are 4K. Find K. Also for the first four full years make an amortization table and explain why for each year principle repaid is negative.