1. The Dannys will need $80,000 annually for 20 years during retirement. How much will they need at retirement if they can earn a 4% rate of return?
2. A store will give you a 4.50% discount on the cost of your purchase if you pay cash today. Otherwise, you will be billed the full price with payment due in 1 month. What is the implicit borrowing rate being paid by customers who choose to defer payment for the month?
3. A levered firm has a pretax cost of debt of 6.8 percent and an unlevered cost of capital of 13.4 percent. The tax rate is 34 percent, and the cost of equity is 16.06 percent. What is the debt-equity ratio?