1. Determine the capitalized cost of an alternative that has a first cost of $55,000 an annual maintenance cost of $12,000 and a salvage value of $8,000 after its 6-year life. Use an interest rate of 8% per year.
2. Graystone bonds have a par value of $1,000. The bonds carry a coupon rate of 5 percent. Interest is paid semi-annually. The bonds will mature in eight years. If the current market price of this type of bond is $780
A. What is the yield to maturity on the bond?
B. What is the current yield on the bond?