1. In December 2014, 9-month futures on the Australian S&P/ASX 200 Index traded at 5,493. Spot was 5,478. The annual interest rate was 2.96% and the annual dividend yield was about 4.3%.
a. Based on the current spot price, what should be the futures price? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
2. How should you choose the best capital budgeting projects under capital rationing?
What is the purpose of using the payback method?