1. Automatic Transmissions, Inc., has the following estimates for its new gear assembly project: price = $860 per unit; variable cost = $320 per unit; fixed costs = $3.4 million; quantity = 60,000 units. Suppose the company believes all of its estimates are accurate only to within 15 percent.

Required:

What values should the company use for the four variables given here when it performs its best-case and worst-case scenario analysis? (Do not round intermediate calculations. Enter your answers in dollars, not millions of dollars. Round your answers to the nearest whole dollar amount (e.g.,1,234,567).)

Scenario	Unit Sales	Unit Price		Unit Variable Cost		Fixed Costs
Base case	60,000	$	860	$	320	$	3,400,000
Best case
Worst case

1. Suppose you bought a bond with a coupon rate of 7.5 percent one year ago for $941. The bond sells for $949 today.

Required:

(a)	Assuming a $1,000 face value, what was your total dollar return on this investment over the past year?

Total dollar return

$

(b)	What was your total nominal rate of return on this investment over the past year? (Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places (e.g., 32.16).)

Total nominal rate of return

%

(c)	If the inflation rate last year was 4 percent, what was your total real rate of return on this investment? (Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places (e.g., 32.16).)

Total real rate of return

%

1. Youve observed the following returns on Doyscher Corporations stock over the past five years: 12 percent, 21 percent, 27 percent, 6 percent, and 17 percent. The average inflation rate over this period was 3.2 percent and the average T-bill rate over the period was 4.3 percent.

Requirement 1:

What was the average real risk-free rate over this time period? (Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places (e.g., 32.16).)

Average real risk-free rate

%

Requirement 2:

What was the average real risk premium? (Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places (e.g., 32.16).)

Average real risk premium

%