Assume that as of today, the annualized interest rate on a three-year security is 2 percent, while the annualized interest rate on a two-year security is 1.25 percent. Use this information to estimate the one-year forward rate two years from now.

Bonds often pay a coupon twice a year. For the valuation of bonds that make semiannual payments, the number of periods doubles, whereas the amount of cash flow decreases by half. Using the values of cash flows and number of periods, the valuation model is adjusted accordingly.

Assume that a $1,000,000 par value, semiannual coupon U.S. Treasury note with two years to maturity has a coupon rate of 3%. The yield to maturity (YTM) of the bond is 11.00%. Using this information and ignoring the other costs involved, calculate the value of the Treasury note:

$859,794.00

$730,824.90

$541,670.22

$1,031,752.80

Based on your calculations and understanding of semiannual coupon bonds, complete the following statements: • Assuming that interest rates remain constant, the T-note’s price is expected to_______ .

• The T-note described is selling at a_________.

• When valuing a semiannual coupon bond, the time period variable (N) used to calculate the price of a bond reflects the number of_________ periods remaining in the bond’s life.

Note: This problem is for the 2018 tax year.

On November 1, 2008, Janet Morton and Kim Wong formed Pet Kingdom, Inc., to sell pets and pet supplies. Pertinent information regarding Pet Kingdom is summarized as follows:

Pet Kingdom's business address is 1010 Northwest Parkway, Dallas, TX 75225; its telephone number is (214) 555-2211; and its e-mail address is [email protected].

The employer identification number is 11-1111111, and the principal business activity code is 453910.

Janet and Kim each own 50% of the common stock; Janet is president and Kim is vice president of the company. No other class of stock is authorized.

Both Janet and Kim are full-time employees of Pet Kingdom. Janet's Social Security number is 123-45-6789, and Kim's Social Security number is 987-65-4321.

Pet Kingdom is an accrual method, calendar year taxpayer. Inventories are determined using FIFO and the lower of cost or market method. Pet Kingdom uses the straight-line method of depreciation for book purposes and accelerated depreciation (MACRS) for tax purposes.

During 2018, the corporation distributed cash dividends of $250,000.

Pet Kingdom's financial statements for 2018 are shown below.

*Depreciation for tax purposes is $136,000.

During 2018, Pet Kingdom made estimated tax payments of $56,000 each quarter to the IRS.

If an answer is zero, enter "0".

Enter all amounts as positive numbers.

If required, round final answers to the nearest dollar.

Please help with Schedule M-1, M-2, M-3

Consider an investment that costs $100,000 and has a cash inflow of $25,000 every year for 5 years. The required return is 9%, and payback cutoff is 4 years.

A. What is the payback period?

B. What is the discounted payback period?

C. What is the NPV? D. What is the IRR?

E. Should we accept the project?

What method should be the primary decision rule?

When is the IRR rule unreliable?

Please include steps on how to solve and all parts to question. Thank you.

In a slow year, Deutsche Burgers will produce 2.400 million hamburgers at a total cost of $3.900 million. In a good year, it can produce 4.200 million hamburgers at a total cost of $4.800 million. a. What are the fixed costs of hamburger production? (Do not round intermediate calculations. Enter your answer in millions rounded to 1 decimal place.) b. What is the variable cost per hamburger? (Do not round intermediate calculations. Round your answer to 2 decimal places.) c. What is the average cost per burger when the firm produces 1 million hamburgers? (Do not round intermediate calculations. Round your answer to 2 decimal places.) d. What is the average cost per burger when the firm produces 2 million hamburgers? (Do not round intermediate calculations. Round your answer to 2 decimal places.) e. Why is the average cost lower when more burgers are produced? The fixed costs are spread across more burgers. Variable costs are lower per burger. Fixed costs are constant per burger.

Compute the cost of not taking the following trade discounts: (Use 365 days in a year. Round the intermediate calculations to 4 decimal places. Round the final answer to 2 decimal places.)

a. 2/13, net 50.

Cost of lost discount             %

b. 2/20, net 50.

Cost of lost discount              %

c. 3/18, net 65.

Cost of lost discount             %

d. 3/18, net 150.

Cost of lost discount             %

The following are the cash flows of two projects:

a. If the opportunity cost of capital is 12%, calculate the NPV for both projects. (Do not round intermediate calculations. Round your answers to 2 decimal places.)

b. Which of these projects is worth pursuing?

****NOTE**** You are finding the NPV, NOT the Profitability index!

The following table shows the nominal returns on Brazilian stocks and the rate of inflation.

Year Nominal Return (%) Inflation (%)

2012 0.5 6.8

2013 -14.0 6.9

2014 -12.0 7.4

2015 -42.4 11.7

2016 67.2 7.3

2017 27.9 3.9

a. What was the standard deviation of the market returns?

b. Calculate the average real return.