1:

Problems 1 and 2 require the use of Excel's "Solver" add-in. This may not be immediately available on your installation of Excel. To get to "Solver", you want to click on "Add-Ins" under in the "Developer" tab (or sometimes "Add-Ins" appears as a tab of its own). In "Add-Ins", click the box to enable the "Solver Add-in". "Solver" should then appear under the "Data" tab (probably on the far right). Alternatively you may be able to click on the Solver add-in through the sequence "File" "Options" "Add-ins", then at the bottom, for Manage: Excel Add-ins, click "Go". There you can click on "Solver" and "Ok". If you do not have the "Developer" tab, you can add it to your ribbon. From "File" or "Home", click on "Options", where you can click on "Customize Ribbon", in which you can click on "Developer". A bond with face value $1098 and a term of 7 years pays quarterly coupons of 6% per annum. The bond is offered at a price of $886. You are to enter the above values into a spreadsheet, along with - an initial wild guess at what the yield would be, and - a calculation of the bond price using your guess as the yield.

(a)

Use Excel's "Solver" (which is different from "Goal Seek") to solve for the actual yield that produces the correct bond price. Take a screen shot of your computer with "Solver" open showing clearly the entries that you put into Solver. Paste the screen shot into an application (like Paint), and save it as a (.png) file. Upload your screenshot below.

(b)	What is the yield calculated by Solver?

Problem #1(a):

Problem #1(b):

Answer as a percentage correct to 2 decimals

2:

Consider an investment where the cash flows are: $967.16 at time t = 0 (negative since this is your initial investment) $439 at time t = 1 in years $278 at time t = 2 in years $372 at time t = 3 in years

(a)	Use Excel's "Solver" to find the internal rate of return (IRR) of this investment. Take a screen shot showing Solver open with your entries for the function clearly visible. Paste the screen shot into an application (like Paint), and save it as a (.png) file. Upload your screenshot below.

(b)	What is the value of IRR found by Solver?

Problem #2(a):

Problem #2(b):

Answer as a percentage correct to 2 decimals