If the market interest rate is 4 percent and it matures in


1. Assume that you are interested in a zero-coupon bond. If the market interest rate is 4 percent, and it matures in twenty-eight years, what should the price of the bond be?

2. Assume the following information for ABC Inc:

Total Invested Capital (TIC) = $300 million

Earnings before interest and taxes (EBIT) = $100 million

ABC Corporate Tax Rate (T) = 40%

Cost of Capital (a.k.a. WACC) = 10%

ABC Corporation's Economic Value Added (EVA) is: ______

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Financial Management: If the market interest rate is 4 percent and it matures in
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