$1.$ Bond valuation: A tax$-$exempt bond was recently issued at an annual $7$ percent coupon rate and matures $20$ years from today. The par value of the bond is $$5,000.$

a$.$ If required market rates are $7$ percent, what is the market price of the bond?

b$.$ If required market rates fall to $3$ percent and maturity is $20$ years, what is the market price of the bond?

c$.$ If required market rates rise to $14$ percent and maturity is $20$ years, what is the market price of the bond?

d$.$ At what required market rate $(7$ percent, $3$ percent, or $14$ percent$)$ does the above bond sell at a discount? At a premium?

$2.$ Loan amortization: The Johns Hopkington Hospital needs to borrow $$5$ million to purchase a magnetic resonance imaging $($MRI$)$ scanner. The interest rate for the loan is $6$ percent. Principal and interest payments are equal debt service payments, made on an annual basis. The length of the loan is $5$ years. The CFO of Johns Hopkington wants to develop a loan amortization schedule for this debt borrowing for tomorrow morning$$s meeting. Prepare such a schedule.

$3.$ Purchase versus lease: Stonewood General Hospital, a taxpaying entity, is considering a leasing arrangement for it$$s ambulance fleet. The fleet of ambulances costs $$375,000$ and will be depreciated over a $10-$year life to a salvage value of $$75,000.$ Stonewood General could finance the entire fleet with equal annual debt and principal payments at a before$-$tax cost of debt of $9$ percent and an after$-$tax cost of debt at $6$ percent for $10$ years. The implied lease rate is also $9$ percent. Alternatively, it could lease the fleet for $10$ years. The before$-$tax lease payments are $$45,000$ per year for $10$ years. Stonewood General$$s tax rate is $40$ percent. From a financial perspective, should Stonewood General lease or borrow the money to buy the ambulances?