1. If you choose to take out an interest only loan with 6.50% interest rate, what is the after tax interest rate? Assume a 28% income tax rate.
2. The amount by which the required discount rate exceeds the risk-free rate is called A) the opportunity cost. B) the risk premium. C) the risk equivalent. D) the excess risk.
3. Find the internal rate of return (IRR) for the following series of future cash flows. The initial outlay is $795,800. Year 1: 168,500 Year 2: 226,500 Year 3: 238,500 Year 4: 170,800 Year 5: 179,900 Round the answer to two decimal places in percentage form.