1. A real estate investment has the following expected cash flows: Year Cash Flows 1 $11,195.00 2 28,103.00 3 47,691.00 4 42,849.00 The discount rate is 10.00 percent per year. What is the investment's present value?
2. You buy a zero coupon bond at the beginning of the year that has a face value of $1,000, a YTM of 12 percent, and 9 years to maturity. You hold the bond for the entire year. Assume semiannual compounding.
How much interest income will you have to declare on your tax return?