1. As a winner of a lottery you are going to receive $10,000 every year forever, starting one year from today. If the appropriate discount rate is 8%, what is the present value of the award cash flows?
$100,000
$125,000
$40,000
$20,000
50,000
2. Assume the same risk for 30-year AAA Corporate bonds and 30-year Municipal Bonds. If you are indifferent between the two bonds what is your implied marginal tax rate?
25%
28%
29%
30%
32%