1. Explain how sensitivity analysis is related to the constraints. Provide an example.
2. What is the annual payment on a 20-year fully amortized loan of $500,000 with an interest rate of 5%?
3. You bought one of Great White Shark Repellant Co.’s 8 percent coupon bonds one year ago for $760. These bonds make annual payments and mature 12 years from now. Suppose you decide to sell your bonds today, when the required return on the bonds is 9 percent. If the inflation rate was 3.4 percent over the past year, what was your total real return on investment?