Greeting,

seek your help to solve the below H.W.

Your firm needs to invest in a new delivery truck.The life expectancy of the delivery truck is five years.You can purchase a new delivery truck for an upfront cost of $200,000, or you can lease a truck from the manufacturer for five years for a monthly lease payment of $4000 (paid at the end of each month).Your firm can borrow at 6% APR with quarterly compounding. Calculate the effective annual rate on your firm's borrowings.

a)Calculate the effective monthly discount rate that you should use to evaluate the truck lease.

a)Calculate the present value of the lease payments for the delivery truck.

Q2)Briefly discuss whether each of the following statements is TRUE or FALSE. Please explain briefly why it is TRUE or FALSE.

a) Bonds are a securities sold by governments and corporations to raise money from investors today in exchange for promised future payments.

b) By convention the coupon rate is expressed as an effective annual rate.

c) Bonds typically make two types of payments to their holders.

d) The time remaining until the repayment date is known as the term of the bond.

Q3)a) How much would you like to pay 100 face value of a four-year, zero-coupon, risk-free bond? In other words, calculate the price. Please show all your works.

b) Suppose a five- year bond with a 7% coupon rate and semiannual compounding is trading for a price of $951.58. Expressed as an APR with semiannual compounding, calculate the bond?s yield to maturity (YTM). Please show all your works.

Q4)Consider the following two projects: (see attached file please)

Q5)Briefly discuss whether each of the following statements is TRUE or FALSE. Please explain briefly why it is TRUE or FALSE.

a) The payback rule is useful in cases where the cost of making an incorrect decision might not be large enough to justify the time required for calculating the NPV.

b) The payback rule is reliable because it considers the time value of money and depends on the cost of capital.

c) For most investment opportunities expenses occur initially and cash is received later.

d) Fifty percent of firms surveyed reported using the payback rule for making decisions.

Regards,