1) Idaho Industries Inc. is considering a project that has an initial after-tax outlay or after-tax cost of $450,000. The respective future cash inflows from its five-year project for years 1 through 5 are $95,000 each year. Idaho expects an additional cash flow of $60,000 in the fifth year. The firm uses the IRR method and has a hurdle rate of 10%. Will Idaho accept the project?

A.

Idaho accepts the project because it has an IRR greater than 5%.

B.

Idaho accepts the project because it has an IRR greater than 10%.

C.

Idaho rejects the project because it has an IRR less than 10%.

D.

Idaho rejects the project because it has an IRR greater than 10%.

2)

Big House Nursery Inc. has issued 20-year $1,000 face value, 8% annual coupon bonds, with a yield to maturity of 10%. The current price of the bond is ________.