1. Explain why the capital expenditure build-up in the unconventional oil and gas sector was heavily financed by debt
2. For a present sum of $800,000, determine the annual worth (in then-current dollars) in years 1 through 8 if the market interest rate is 12% per year and the inflation rate is 4% per year.
The annual worth is $.
3. If Danny buys a 1-year T-bill with a yield of 3% that reflects an Inflation Premium of 1%, and Karen buys a 2-year T-note yielding 4% each year, what is the expected rate of inflation in the second year of Karen's note (assuming the real rate of interest holds constant over the two years)?
a. 1%
b. 4%
c. 3%
d. 2%