1. GM issued a $ 1,000, 30-year bond 5 years ago at 9 % interest. Comparable bonds yield 6 % today. What should GM bond sell for now?

2. Define each variable in the equation P = (D1 + P1) / (1 + R)

3. Solve the NPV and solve for the Payback

YR Cash Flow

0 -$26,000

1 11,000

2 14,000

3 11,000

with the required rate equal to 6%

4. Use the following tax brackets for taxable income:

Bracket: Tax Rate

0$10,000 15%

$10,000$50,000 25%

$50,000$250,000 30%

Over $250,000 35%

Compute the average tax rate for the following taxable income amounts

a. $20,000

b. $125,000

c. $350,000

d. $1,000,000

5. Where do analysts get financial information about companies? What are their concerns about the information?

6. Why dont we calculate the difference in the equity account between the beginning and end of the year and consider that difference as a source or use of cash? Why do we similarly exclude the cash account? Explain.