QUESTION 7

1. Assume Rafael can earn an 6 percent after-tax rate of return. He can receive $2,000 today or $3,000 in five years. What is the present value of the $3,000 payment due in five years?

QUESTION 11

1. Komiko Tanaka invests $13,000 in LymaBean, Inc. LymaBean does not pay any dividends. Komiko projects that her investment will generate a 11 percent before-tax rate of return. She plans to invest for the long term. If she holds the investment for 6 years and then she sells it when the long-term capital gains rate is 15 percent, what is her after-tax rate of return?