5) An initial investment of 2m is required to undertake a new project. The project has three years life span and it is expected to yield the following cash flows for the next three years:1,000,000; 1,200,000 and 300,000 respectively. Calculate the accounting rate of return for this project. (4 marks) 6) ATY plc issues a bond with par value of 100 in December 2020, redeemable in December 2026 at par value. The coupon rate for this bond is 8%, paid annually. Presently, the market required rate of return is 7%. Calculate the present value of the bond. (4 marks) 7) Ask plc. is about to issue a 200 bond to raise additional capital for a new project. The bond conveys a right to convert into 90 ordinary shares which are presently trading at 2. Calculate the bond's conversion price and conversion premium. (4 marks) 8) As an investment associate, your line manager has invited you to discuss about a project. The project requires an initial investment of 100,000. This project is expected to generate 100,000 and 150,000 in the first and second years respectively. The market required rate of return for similar projects is 10%. You have been asked to calculate the profitability index for this project. (4 marks)