1.The RST Corp. is considering the purchase of some new equipment which will cost $120,000, last for 5 years, and generate after-tax cost savings of $45,000, $37,000, $25,000, $20,000, and $20,000 respectively per year. The firm's cost of capital is 10%. The IRR of this project is

a.-8.58%

b.8.36%

c.8.58%

d.12%

2. Mary just bought a 20-year bond with an 8% coupon rate (paid semi-annually) and $1000 par value for $1050. She is expecting an effective annual yield (EAY) of a.7.65%

b.8.51%

c.10%

d.9.5%

3. Giant Electronics is issuing 20-year bonds that will pay coupons semiannually. The coupon rate on this bond is 7.8 percent. If the market rate for such bonds is 7 percent, what will the bonds sell for today?

a.$1085

b.$861

c.$1037

d.$923

4. Alice Trang is planning to buy a six-year bond that pays a coupon of 10 percent semiannually. Given the current price of $878.21, what is the yield to maturity on these bonds?

a.11%

b.12%

c.14%

d.13%

5. The U.S. Treasury has issued 10-year zero coupon bonds with a face value of $1,000. Assume that coupon payments are normally semiannual. What will be the current market price of these bonds if the opportunity cost for similar investments in the market is 6.75 percent?

a.$604

b.$684

c.$515

d.$860

Please show work.