The next two questions are based on this prompt: If your r = 12%, what is the maximum you should be willing to pay for a coupon bond maturing in exactly 24 years that has a $20,000 maturation value and will make one $200 coupon payment every year until it matures? Question 1: Which combination of the Key Finance Equations are easiest to use to answer this question? Select one: O a. Both equation 1 and equation 5. O b. Both equation 1 and equation 6. O c. Both equation 2 and equation 5. O d. Both equation 2 and equation 6. Basic 1. FV = PV(1 + r)" 2. PV=FV + (1 + r)" 3. r=(FV + PV) --- 1 4. n=In (FV + PV)+In (1+r) Multiple Cash Flow 5. PV =(FVA+r)(1-(1+(1+r)")) 6. PV,= (FV, +1) 7. Only ifr>g: PV cop = FV CGP + (- g) 8. Ift=1: FVAL = rPVL = (1 - (1 + (1+r)")) 9. Ift>1; p=r+t: FVA - PPV +(1-(1 = (1 + p) "")) 10. EAR=(1+p) - 1 Solving for r [R] 11. Zero-coupon bond: use basic equation 3. 12. Coupon bond: Use an online bond yield calculator or a financial calculator. 13. Preferred stock: Solve equation 6 for r, yielding r=FV + PV =D, P, 14. Constant growth stock: Solve equation 7 for r, yielding r= (FV, +PV)+g=(D,+P.) +g Bonus Equations: 15. E(R)-R+B. [E(R)-R] 16. Degree of leverage = value of the asset + amount of equity 17. WACC = (CSW,* R.) + (CSW, *R[1 - tax rate])