a. You are trying to save to buy a new $25,000 speedboat to take to the lake. You have $5,652.26 today that can be invested at your bank. The bank pays 6% annual interest on its accounts. How long will you have to wait?

b. The observed nominal interest rate is a sum of the real interest rate and the expected inflation rate. Assume that the real rate is 3% for all maturities. If the nominal rate on 1-year T-bond is 7% and that on 2-year T-bond is 10%, estimate the nominal rate on 1-year bond during the second year.

c.

The NOL corporation just received $240,000 as the dividend income of which only 30 % is taxed and has the following cash flows:

Operating income $600,000

Interest paid 70,000

Interest received 60,000

Dividends received 180,000

Dividends paid 50,000

If the applicable income tax rate is 21 percent (federal and state), what is the corporation's after-tax income?