1.What time value of money formulas are needed to price a $1000 bond paying 8% with a YTM of 10%, and 10 years to maturity. Just state formulas, no computations needed.

2.

Given the following information, prepare an income statement:

Selling and administrative expenses .............$ 122,000

Depreciation expense ...................................... 53,000

Sales ................................................................ 489,000

Interest Expense .............................................. 52,000

Cost of goods sold .......................................... 156,000

Taxes .............................................................. 40% tax bracket

3.B corp has earnings before taxes of $400,000 and sales of $3,000,000. If it is in the 25% tax baracket

4. Why is the cost of debt less than the cost of preferred stock if both securities are priced to yeld 10% in the market?