= Bonus Problem 1 (Optional, 25 marks) A company has $60000 initially and would like to start a new business project. The details of the business project is given as follows: The business project lasts for 15 years (i.e. the project will end at the end of 15th year). This project requires a start-up cost of $80000 (paid at time 0). In addition, the company needs to pay a maintenance cost of $5000 at the end of every year until the end of the project. Once the project is launched at time 0, the project will generate a revenue at the end of every year for 15 years. The amount of revenue received at the end of kth year is Rk : X(1.05)k-1 for k = 1,2, ...,15. In order to launch the project, the company needs to borrow an amount of $20000. To do so, the company issued a 10-year coupon bond to the market at a price of $20000. This bond has face value F $20000, redemption value C = $22000 and annual coupon rate c payable annually. It is also given that the annual effective yield rate of the bond is i 5.767%. When the company receives the revenue from the investment project, the company reinvests the revenue in an investment fund which earns compounded interest at an annual effective interest rate of 5.2%