1. What are the main features of a corporate bond that would be listed in the indenture?

2. what are the differences between preferred stock and debt?

3. The Alpha Corporation is considering investing in a riskless project costing $100. The project receives $107 in one year and has no other cash flows. The riskless discount rate comparable riskless investments is 2 percent. Calculate NPV.

4. Discuss the following statement: If a firm has only independent project, a constant WACC, and project with normal cash flows, the NPV and the IRR methods will always lead to identical capital budgeting decisions. What does this imply about the choice between IRR and NPV? If each of the assumptions were change(one by one), how would your answer change?

5. Project X is very risky and has an NPV of $3 million. Project Y is very safe and has an NPV of 2.5 million. They are mutually exclusive, and project risk has been properly considered in the NPV analyses. Which project should be chosen? Explain.