1. Describe how the cost of capital would change over different stages of a new venture? Explain the reason for such a pattern?
2. Compute the taxable income of following TIPS 10-year note at the end of first 6 months since issuance. Terms of TIPS 10-year note: 1) Value at issuance (par amount) = $1,000; 2) Stated rate of interest (annual coupon rate) = 6% payable semiannually. CPI at issuance = 100, 4% annual inflation rate.