3.Two year ago, Alpha Supply issued 15-year bonds at par. The bonds have a coupon rate of 6.5 percent, paid semiannually, and a face value of $1,000. Today, the market yield on these bonds is 5.6 percent. What is the percentage change in the bond price over the past year?

a.

The bond price did not change.

b.

-5.87 percent

c.

8.65 percent

d.

-6.11 percent

e.

8.23 percent

4.The Book Store is considering a new four-year expansion project that requires an initial fixed asset investment of $2.1 million. The fixed asset will be depreciated straight-line to zero over its five-year life, after which time it will be worthless. The project is estimated to generate $1.98 million in annual sales, with cost of goods sold at $0.79 million. If the tax rate is 34 percent, what is the OCF for this project?

a.

$963,900

b.

$1,190,000

c.

$928,200

d.

$325,400

e.

$665,000