1. Based on Week 4's readings on the Chicago parking meter privatization, detail the discount rates used by each report (OIG and William Blair). What was the justification used by each report in their justification of the appropriate discount rate? Why does the selection of the discount rate matter so much in the case of the Chicago parking meters privatization? (1.5 points) 2. Indicate which bond in the following pairs of bonds is likely to bear the higher interest rate (yield) and state why. If there is no general reason for the difference, indicate that they would be the same. (1.5 points) a. A corporate bond rated Aaa or a municipal bond rated Aaa b. A municipal bond rated Baa or a municipal bond rated Aa c. A general obligation bond issued by a city or a revenue bond issued by a city d. A general obligation bond rated Aa issued by a city or a general obligation bond rated Aa issued by a county e. A municipal bond (term) with a maturity in five years or a municipal bond (term) with a maturity in twenty years 3. A tax system has the following income tax brackets: $0 to $20,000, 10%; $20,001 to $40,000, 15%; $40,001 to $60,000, 20%; and over $60,000, 25%. Calculate the effective tax rate and marginal tax rate for both of these individuals: Tom makes $90,000 and has $10,000 in itemized deductions and $3,500 in a personal exemption. John makes $35,000 and has $5,900 in the standard deduction and a $3,500 personal exemption. Based on your calculations for these individuals, is the tax system regressive, progressive or proportional? Why? (2 points) 4. The Congressional Budget Office reports that the highest 1 percent of income earning households paid 38.7 percent of total federal individual income tax collected in calendar year 2009. What does this information indicate about progressivity or regressivity of the federal income tax? Explain.