1.The YouBeaut Investment Company is offering an investment that pays $24,000 per year for 19 years. If the investment is risk free, and the relevant risk free interest rate is 8.2% per year, how much would you be willing to pay for the investment? Give your answer to the nearest cent.?

2.You are considering an investment that pays $200 per year in perpetuity. If the appropriate interest rate is 5%, what is this investment worth today? Assume the first payment will be made in exactly one year.

A	$4,000
B	$8,000
C	$210
D	$1,000

3.The effective annual rate (EAR) for a loan with a stated APR of 8% compounded monthly is closest to:

A.	8.00%
B	8.66%
C	8.30%
D	7.72%

4.Which of the following statements is false?

A	Interest rates we observe in the market will vary based on quoting conventions, the term of investment, and risk.
B	The opportunity cost of capital is the return the investor forgoes when the investor takes on a new investment.
C	The investors opportunity cost of capital is the best available expected return offered in the market on an investment of comparable risk and term of the cash flows being discounted.
D	For a risk-free project, the opportunity cost of capital will typically be greater than the interest rate of U.S. Treasury securities with a similar term.

5.Which of the following statements is false?

A	Because a corporation is a separate legal entity, when it fails to repay its debts, the debt holders are entitled to seize the assets of the corporation in compensation for the default.
B	If the corporation fails to satisfy debt holders' claims, debt holders may lose control of the firm.
C	As long as the corporation can satisfy the claims of the debt holders, ownership remains in the hands of the equity holders.
D	In bankruptcy, management must negotiate with debt holders for the opportunity to reorganise the firm and stay in business.