1. A six-year annuity of $10000 quarterly payments will begin 8 years from now. The discount rate is 9%, compounded quarterly.
a) How much is this annuity worth 5 years from now?
b) How much is this annuity worth today?
2. A UK’s Firm has £750,000 of depreciation expense on its subsidiary’s books. The US income tax rate is 35% and the spot exchange rate is £.75/$ if the dollar appreciates to £.85/$ how much has the dollar tax shield changed?
A. The tax shield decline $76,471
B. The tax shield Increased $76,471
C. The tax shield decline $117,647
D. The tax shield Increased $41,176
E. The tax shield decline $41,176