You have to do these problems independently.

I have solved the first problem for you. Please use this as a model to show the details of the calculations and the logic in your procedure. The answers to the problems are given for your guidance. Getting the right answer is not enough. Note the following:

Please include the statement of the problem with the solution.

Write a financial principle to start your problem. For example, The PV of a loan is equal to the PV of installments, properly discounted.

Write an equation to represent the financial principle. You should include the equation number, such as (2.1), that you are using to set up the problem.

You can solve the equation by using a WolframAlpha statement. Write that statement within your solution so that I can verify your answer.

If you are using Excel, make sure the Excel table is embedded in the Word file.

Use explanations to show your logic.

1.1. At Wal-Mart, in the hardware department, a customer buys five gallons of paint and six brushes and pays $97.52 for them, including 6% sales tax. Another person buys eight gallons of paint and five brushes and pays $146.28, including the sales tax. Find the price of a gallon of paint and that of a brush.

Suppose the paint sells for $x per gallon and the brushes are $y each. The total for the first customer is 5x + 6y. Adding 6% sales tax, then it becomes 1.06(5x + 6y). The total is $97.52. Thus we get the equation

1.06(5x + 6y) = 97.52

Likewise, the equation for the second customer is

1.06(8x + 5y) = 146.28

To solve the equations, go to WolframAlpha and write the following instruction

1.06*(5*x+6*y)=97.52,1.06*(8*x+5*y)=146.28

The result comes out as x = 16 and y = 2. Thus, paint is $16 per gallon and brushes are $2 each.

1.2. Alsace Corporation has invested in the following two projects. The following table provides the cash flows from the two projects under different states of the economy.

State of the Economy	Probability	Project A	Project B
Good	60%	$5000	$7000
Average	30%	$4000	$3000
Poor	10%	-$3000	$2000

Find the following:

(A) Standard deviation of A, (A)

(B) Standard deviation of B, (B)

(C) Correlation coefficient between the two projects, r_AB .6768

1.3. Aquitaine Corporation has borrowed $1.35 million from a bank with the understanding that it will pay $60,000 a month, until the loan is paid off. The bank will charge 6% per annum interest on the unpaid balance, calculated monthly. Aquitaine will make the payments at the end of each month. Find the following:

(A) How long will it take Aquitaine to pay off the loan? 24 months

(B) What is the partial payment for the last month? $55,748.40

1.4. Brittany is planning for her retirement. She has 30 years before she retires. She plans to keep the money in a bank, which will pay interest at the annual rate of 3% and compound it monthly. She will start by depositing $300 in the account at the beginning of the first month. In the second and subsequent months, she will increase the deposit by 1% every month. How much money is there in the account after 30 years? Answer is not given

1.5. Normandy Corporation 6.5% bonds will mature on January 15, 2021. They pay interest semiannually, on January 15 and July 15. On July 16, 2013, these bonds are selling at $845 each. The required rate of return is 9%. By comparing the intrinsic value and the market value of the bonds, determine if you should buy these bonds. Yes.

1.6. Burgundy Company bonds have a coupon of 5.5%, paying interest semiannually. They have a face value of $1,000 and will mature after 9 years. Your income tax rate for interest income is 28%, but only 15% on capital gains. You pay the taxes once a year. How much should you pay for a Burgundy bond if your after-tax required rate of return is 8%? $732.07.

1.7. Lorraine Corporation is expected to pay $1.00 dividend after two years, $1.25 after 3 years, $1.50 after 4 years, and then $2.00 a year uniformly after fifth and subsequent years. If the stockholders of Lorraine require 15% return on their investment, find the price of the stock now. What is its price after 12 years? $10.06, $13.33

1.8. Picardy Corporation stock pays its annual dividend on every October 15. Its expected future dividends are shown in the following table.

Year	2013	2014	2015	2016	2017
Dividend	$1.40	$1.50	$1.60	$1.80	$2.00

In the year 2018, and all the following years, the dividend will remain constant at $2.00. The shareholders of Picardy require a return of 14% on their investment. Find the price of this stock on October 16, 2013, just after it has paid its dividend. What is its price on October 14, 2014, just before it pays its dividend? $13.40, $15.28