1. Jay, Inc. has 7% coupon bonds outstanding with semiannual payments and is priced at par value. The Jay, Inc. bond has 2 years to maturity. If interest rate suddenly rises from 7% to 9%, what is the percentage change in the price of the bond?
2. Project X has an initial cost of $50,000, it’s expected cash inflows are $10,000 per year for eight years and it’s WACC is 10%. What is the modified internal rate of return for project X?