Question
I am confused as to how to answer both of these questions, I would appreciate the help, please. 1. Value Invest inc is considering purchasing
I am confused as to how to answer both of these questions, I would appreciate the help, please.
1. Value Invest inc is considering purchasing a parcel of wilderness land near a popular historic site. Although this land will cost Value Invest $400,000 today, Value Invest expects to make $35,000 at the end of each year indefinitely by renting out wilderness campsites on this land. If the appropriate discount rate is 8%, then the NPV of this new wilderness land project is closest to: A) $50,000 B) -$37,500 C) -$50,000 D) $37,500
2. Consider stocks and corporate bonds of Selfie Inc. Selfie's stock and bond price were equal to 30 and 70 at the start of 2017 and increased in value to 50 (Selfie stock) and 75 (Selfie bond) at the end of 2017. Selfie paid a coupon of 5 over 2017 and a dividend of 10. Which statement is TRUE? A) Selfie's total stock return falls below Selfie's total bond return over 2017. B) The stock's capital gain rate exceeds the bond's capital gain rate over 2017. C) Selfie's dividend yield is equal to 40%. D) The bond's yield to maturity increased over 2017.
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