1.

f you owe $35,000 payable at the end of eight years, what amount should your creditor accept in payment immediately if she could earn 13 percent on her money? Use Appendix B for an approximate answer, but calculate your final answer using the formula and financial calculator methods. (Do not round intermediate calculations. Round your final answer to 2 decimal places.)

Present Value-

Q2.

Assume a firm has earnings before depreciation and taxes of $200,000 and no depreciation. It is in a 40 percent tax bracket.

a. Compute its cash flow.

Cash flow- b. Assume it has $200,000 in depreciation. Recompute its cash flow.

Cash flow- c. How large a cash flow benefit did the depreciation provide?

Benefit in cash flow-

Q2.

Which of the following does a bonds rating NOT depend on?

The corporation's debt-to-equity ratio

The corporation's size

The ability of the firm to make interest payments

The coupon rate on the bond