1. Please read all questions carefully. (b) Make sure that your answers are clear and complete. (c) You may NOT use Excel for any calculations.
2. Using algebra only (do NOT use Excel), find the NPV of -\$2,000 now, \$1000 a year for years 1 to 2 and \$100 in year 4 using a discount rate of 5 percent. Please show all formulae, steps, calculations that you use.

1. (a) Explain what a PVIF (present value interest factor) of 0.7513 for three years, 10 percent means in clear but simple terms. (b) How would the PVIF change if the interest rate rose? Explain clearly and completely why this would happen, using clear and simple terms.

1. Explain clearly and completely whether (a) cash flows of \$100 in year 1, \$300 in year 3, \$500 in year 5 would have a higher NPV than (b) cash flows of \$100 in year 1, \$300 in year 3, \$500 in year 15 and why this would be the case.

1. Explain clearly and completely if it is worthwhile to accept an investment of \$10,000 today if the NPV is only \$1? Please do NOT just cite a rule; make sure you explain the logic of your answer in detail. I would suggest that you use the basic valuation model as part of your answer.

1. Suppose a bond with a 10 year life, a 9 percent coupon and face value of \$1000 sells for \$800 today. Would this mean that the yield-to-maturity of the bond is less than 9 percent? Explain clearly and completely why or why not. Do NOT just cite a rule.

1. Discuss clearly and completely at least two reasons why a firm may choose to “call back” a bond if the bond has a call provision.

1. Please research the bankruptcy of any firm (some examples include General Motors, Eastman Kodak, but there are many others, especially during the 2020-2021 period). Then discuss three interesting things you learnt from your research. Please make sure that you give me the full reference/citation for the article(s) you used.

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