better quality photo

AGEC 340 Class Assignment Date: Name: Class Assignment 19 1. What is the present value of an annuity for $1,000 for 10 periods at 8% discount rate? 2. Assume that a firm has real estate debt with an insurance company of $80,000 at a 10% interest rate. In addition, it has short-term bank loans that over the past few years have averaged $40,000 per year at an interest rate of 5%. What is the weighted average cost of borrowed capital? 3. Assume newly formed corporation ABC needs to raise $2 million in capital so it can buy office buildings and the equipment needed to conduct its business. The company issues and sells 10,000 AGEC 340 Class Assignment Date: Name: shares of stock at $100 each to raise the first $1,000,000. Because shareholders expect a return of 8% on their investment, the cost of equity is 8%. Corporation ABC then sells 1,000 bonds for $1,000 cach to raise the other $1,000,000 in capital. The people who bought those bonds expect a 4.5% return, so ABC's cost pf debt is 4.5%. Corporation ABC's total market value is now ($1,000,000 equity + $1,000,000 debt) - $2 million. What is the Corporation ABC's weighted average cost of capital (WACC)? 4. Suppose Investment A has a 3-year life and Investment B has a 10-year life. The common termination period method would stop both investment at the end of year