Question 1) Emily has a contract in which she will receive the following payments for the next five years: $3,000, $4,000, $5,000, $6,000, and $7,000. She will then receive an annuity of $9,000 a year from the end of the 6th through the end of the 15th years. The appropriate discount rate is 13%. If she is offered $40,000 to cancel the contract, should she do it?

Question 2) Yahoo has $1,000 par value bonds outstanding at 12% interest. The bonds will mature in 25 years. Compute the current price of the bonds if the present yield to maturity is: A) 11% B) 13% C) 16%

Question 3) Wow Chemical Co. has a $1,000 par value bond outstanding that pays 10% annual interest. The current yeild to maturity on such bonds in teh market is 7%. Compute the price of the bonds for these maturity dates. A) 30 Years B) 15 Years C) 1 Year

Question 4) Mr. Pay Attention calls his broker to inquire about purchasing a General Motors bond. The broker quotes a price of $1,170. Mr. Pay Attention is concerned that the bond might be overpriced based on the facts involved. The $1,000 par value bond pays 13% interest, and it has 18 years remaining until maturity. The current yield to maturity on similar bonds is 11%. Do you think the bond is overpriced?