Knight Transportation, Inc. issued bonds on January 1, 2000 with a face value of $1000 per bond. They are due on January 1, 2003. The coupon rate is 6.10% and the market rate is 5.80%. What is the market value of the bond and why? Use an Excel template and copy the answer to solution window.

Explain what you think a yield curve would look like in a period of economic expansion.

Spokane Foundry plans to spend $1,000,000 on new tooling. They are projecting this investment will generate $300,000 a year over the next five years. Depreciation is projected to be $100,000 per year. The tax rate is 30% and they use a 20% discount rate. What is the NPV after taxes taking depreciation into consideration? Should they make the investment?

Assume Chicago Corporation pays a $5.00 dividend and will have a sale price of $200 in one year. The current required rate of return is 20%. What is the current value of the share?

Assume the dividend in the next period is $10, the market rate is 12%, and the grow rate is projected at 4%. What is the current value of a share of stock?

Crescent Industries management is planning on replacing some machinery in its plant. The projected cash flows are shown below. The firm uses an 18% cost of capital. Compute the NPV of the proposed investment opportunity.

Net Present Value Calculations

Year	Cash Flow
0	($3,300,000)
1	$875,123
2	$966,222
3	$1,145,000
4	$1,250,399
5	$1,504,455

Hathaway, Inc., a resort management company, is refurbishing one of its hotels at the cost of $7.8 million. Management expects this will lead to additional cash inflows of $1.8 million each year, over the next five years. Cost of capital is 12%. Calculate the IRR. Should they go ahead with this project?