1. What is discounting? What is another name for discounting?
2. What is usually the largest forecasted cash flow of a capital budgeting analysis? Why
3. Buchanan Corp. is refunding $10 million worth of 11% debt. The new bonds will be issued for 8%. The corporation's tax rate is 37%. The call premium is 12%. What is the net cost of the call premium?
$771,000
$756,000
$760,500
$791,000
4. Solow Corp. has a bond with annual interest payments of $240 maturing in 18 years at a value of $1,000 per bond. The current market price is $870. What will the nominal yield be?
27%
28%
26%
24%