1. What is the present value of the following future? amounts?
a. ?$ 600 to be received 9 years from now discounted back to the present at 9 percent.
b. ?$ 400 to be received 7 years from now discounted back to the present at 9 percent.
c. ?$1,200 to be received 11 years from now discounted back to the present at 5 percent.
d. ?$1,250 to be received 4 years from now discounted back to the present at 19 percent.
2. What would you be willing to pay for a $1000 par, 7 1/2% coupon bond with 15 years until maturity if you wanted to earn a return of 8%?
$957
$985
$966
$991
3. The City of Tempe has a municipal bond outstanding with an interest rate of 3.6%. For an investor in the 25% tax bracket, what is their tax equivalent yield?
4.4%
4.6%
4.8%
4.2%