1. Acme Inc. plans to issue 10-year, zero-coupon bonds to finance its capital expansion. Acme wants to raise $50 million for the expansion. If the required return on the bonds is 7.4%, how many bonds will the firm have to issue?
2. What is the profitability index of a project that costs $10,000 and provides cash flows of $4,000 in years 1 and 2 and $6,000 in years 3 and 4? The discount rate is 10%.