2. Hood Company owns specialized equipment that was purchased in an acquisition of Riding Company. The equipment has a book value of $1,800,000, but according to IFRS, it is assessed for impairment on an annual basis. To perform this impairment test, Hood must estimate the fair value of the equipment. It has developed the following cash flow estimates related to the equipment based on internal information. Each cash flow estimate reflects Hood's estimate of annual cash flows over the next 7 years. The equipment is assumed to have no residual value after the 7 years. (Assume the cash flows occur at the end of each year.) Year 1-3 46 7 Cash Flow Estimate $240,000 365,000 425,000 Hood determines, using their own assumptions, that the appropriate discount rate for this estimation is 6%. To the nearest dollar, what is the estimated fair value of the equipment? 3. Raleigh Inc. is considering leasing a piece of equipment with a fair value of $108,000 for three years. The current market interest rate for financing the equipment is 5% compounded semi-annually. Calculate the semi-annual lease payment assuming that the payment is made at the end of the period (round to the nearest dollar). 4. Blast from the Past issued 10-year bonds with a coupon rate of 3% paid semi-annually and a face value of $500,000. The market interest rate is 5%. a) Calculate the present value of the bonds using PV tables assuming payments are made at the end of the period (round answer to the nearest dollar). b) Calculate the present value of the bonds using PV tables assuming payments are made at the beginning of the period (round answer to the nearest dollar)