1. A bond was purchased at a premium and is now selling at a discount because of a change in market interest rates. If the bond pays a 4% annual coupon, what is the likely impact on the holding-period return if an investor decides to sell now?
2. Quad Enterprises is considering a new three-year expansion project that requires an initial fixed asset investment of $2.67 million. The fixed asset will be depreciated straight-line to zero over its three-year tax life and is estimated to have a market value of $297260 at the end of the project. The project is estimated to generate $2043001 in annual sales, with costs of $843186. The project requires an initial investment in net working capital of $374861. If the tax rate is 35 percent and the required return on the project is 12 percent, what is the project's NPV?