1. Jason has saved $20,000 to cover his living expenses for college for the next four years. JASON invests the money in a financial asset paying 6% interest monthly. How much can Jason withdraw every month while he is in college if the first withdrawal occurs today? (15 pts) 2. Fred purchased a city lot for $39,900. That lot has appreciated at 6.5 percent annually and is now valued at $287,400. How long has Fred owned this lot? (10 pts) 3. An investor is looking at two bonds. The first is a Treasury bond that has an annual coupon rate of 5%, matures in 10 years and a par of $1.000. The second is zero-coupon bond with a 3% yield to maturity that matures in 10 years. The market rate of interest is currently at 3%. a) Compute the current price of both bonds? (10 pts) b) Interest rates are forecast to fall by 50 basis points (0.5%) over the next year. Compute the rate of return on the two bonds? (15 pts) 4. You are given the following information for ABC Inc.: (1) The risk-free rate is 5%. (2) The rate of return on the market is 8%. (3) The expected growth rate in dividends is 4%. (4) The last dividend paid was $0.80 per share. (5) Beta is 1.0 a) What price should ABC sell for today? (10 pts) b) What price should ABC sell for, if the growth rate in dividends rise to 6% and beta increases to 1.5. (10 pts) 5. Company Z has just been organized. It is expected to experience zero growth next year and grow at a 10% rate in years 2 and 3. Beginning in the fourth year the company should attain a 5% growth rate which it will sustain thereafter. The last dividend paid was $1.0 per share. If the cost of capital is 12%, what should be the present price of the stock? (15 pts) b. What should be the price of the stock at the end of the first year? What estimated return would an investor earn holding the stock of Company Z for the next year (15 pts)