1. Lazio Company has a bond outstanding with 15 years to maturity, an 8.25% nominal coupon, semiannual payments, and a $1,000 par value. The bond has a 7.50% nominal yield to maturity, but it can be called in 6 years at a price of $1,150. What is the bond’s nominal yield to call?
8.19%
8.41%
8.11%
8.34%
8.74%
2. Consider an asset that costs $316,800 and is depreciated straight-line to zero over its 9-year tax life. The asset is to be used in a 6-year project; at the end of the project, the asset can be sold for $39,600. Required : If the relevant tax rate is 31 percent, what is the aftertax cash flow from the sale of this asset? (Do not round your intermediate calculations.)
$57,057.00
$346,512.00
$27,324.00
$60,060.00
$63,063.00