1. Suppose you have $300,000 cash, no liabilities, and you make $100,000 a year. Assume the interest rate is 5%, tax rate is 30%, property tax rate is 1%. And there are two identical houses you can choose. You can either rent house number one with a rent for $3,000 per month, or buy house number two with $1.2 million. Please try to discuss which option is better. If you buy house number two, and I want to rent it to somebody else, how much rent you are going to set so you can get a break-even situation as you rent house number one?

2. A company has $100 million cash. In order to collect more money, it issued $250 million bonds. Please establish the balance sheet of this company and show what is the equity before and after it issued the bonds. If it then issued 200 million shares, how much is each share worth?