1. Stellar Espresso, a coffee store chain, wants to buy a building to house its coffee roasting operations. The price of the building is $1.5 million and the company can finance 80% of the building price through a mortgage loan with an annual interest rate of 7%, structured as an amortizing loan with monthly payments. a. Assuming a 20-year term for the mortgage loan, what is the monthly payment? b. If the mortgage instead has a 15-year term, what would the monthly payment be? c. What is the difference in the amount of interest paid with the 20-year mortgage and the 15-year m

2. A U.S. Treasury Bond (face value of $1,000) which has 5 years left until maturity and a coupon of 3.5% (paid semi-annually) is trading at a price of 95.10 in the market. a. What is the yield to maturity for this bond? b. If market interest rates decline by 1.0%, what is the change in the value of the bond? c. Assume instead that this is a zero coupon bond. Given the yield that you calculated in a) what would be the current price of this bond?