1. Edgar has a trust fund that should pay him $21,000 at the end of next year. If a bank loans money at an interest rate of 7.5% (APR), how much money can he borrow from the bank now based on the money he should receive later?

2. Olaf owns a bank account that pays quarterly interest with an EAR of 7.5%. Given this information, how much interest should he expect to earn each quarter?

3. Mercer construction is looking to buy a new bulldozer. They take a loan of $239,000 to cover the cost of the bulldozer. If the interest rate is 8.2% APR, and payments are made monthly for 7 years, what percentage of the outstanding principal does the company pay in interest each month?

4. A 5-year, risk-free, zero-coupon bond has a yield to maturity of 4.25% (yearly). If it has a face value of $2,500, what is the cost of purchasing 5 of these bonds?

5. Enzio Electronic generated free cash flow of $87 million this year (year 0). For the next two years, the company's free cash flow is expected to grow at a rate of 7.0%. After that time, the company's free cash flow is expected to level off to the industry long-term growth rate of 4.0% per year. Suppose the weighted average cost of capital is 9.0% and Enzio Electronic has cash of $100 million, debt of $280 million, and 80 million shares outstanding. What is Enzio Electronic's expected free cash flow in year 2?

6. Awestruck Corporation is expected to pay an annual dividend of $0.30 per share in the coming year, and to trade for $32.49 at the end of the year. If similar investments have an expected return of 8.0%, what is the maximum price you would pay for Awestruck's stock?

7. Couch Potatoes Inc. plans to pay $0.80 per share in dividends in the coming year. If its equity cost of capital is 10.0%, and its dividends are expected to grow by 2.0% per year in the future, what is the value of Couch Potatoes' stock?