1. Discuss how market interest rates are affected by borrowers’ need for capital, expected inflation, different securities’ risks, and securities’ liquidity
2. ABC is evaluating a capital project that would have an initial cost of $117,485. The financial analyst says that the Net Present Value (NPV) is -36,384. Given that information, what is the project's Profitability Index (PI)?
3. What is the value of a 9-year, 9% annual coupon bond, if rd = 10%? Face Value of the bond is $1,000.