1.Last Christmas, Charlotte received an annual bonus of $1,500. These annual bonuses are expected to grow by 5 percent for the next 5 years. How much will Charlotte have at the end of the fifth year if she invests her Christmas bonuses (including the most recent bonus hint: assume this was received at time zero) in a project paying 8 percent per year?

2.Tangshan Mining Company is considering investing in a new mining project. The firm's cost of capital is 12 percent and the project is expected to have an initial after tax cost of $5,000,000. Furthermore, the project is expected to provide after-tax operating cash flows of $2,500,000 in

year 1, $2,300,000 in year 2, $2,200,000 in year 3 and ($1,300,000) in year 4?

Calculate the project's NPV.

Calculate the project's IRR.

Should the firm make the investment? Why or why not?

3.Mr. & Mrs. Zayets wish to purchase a boat in 8 years when they retire. They are planning to purchase the boat using proceeds from the sale of their property which is currently worth $90,000 and its value is growing at 7 percent a year. The boat is currently worth $200,000 increasing at 5 percent per year. In addition to the value of their property, how much additional money should they deposit at the end of each year in an account paying 9 percent annual interest in order to be able to buy the boat upon retirement?

4.a) Your company is considering two investment: buying 10% of the shares in a publicly traded American company that owns five power generation units in Pakistan, or partnering equally with one other private company in building a new power generation unit in Pakistan. For which project would the required return be higher? Cite two reasons why.

b) What are two ways to mitigate the risk of bankruptcy of a third-wed d client of a construction project?