1. Felton Corp. 8% bonds were issued at par value 7 years ago. These bonds mature in 13 years and currently are priced to yield 6%. Which of the following must be true regarding these bonds?
The coupon rate has increase since these bonds were first issued.
The yield to maturity has risen since these bonds were issued.
The current yield of these bonds is greater today than when they were issued.
None of the above
2. Marshall's & Co. purchased a corner lot in Eglon City five years ago at a cost of $810,000. The lot was recently appraised at $685,000. At the time of the purchase, the company spent $5000 to clean the lot and another $40,000 tobrokerage services provided by Century 21. The company now wants to build a new retail store on the site. The building cost is estimated at $1.2 million.
What amount should be used as the initial cash flow for this building project?
a- $1,840.000
b- $1,885.000
c- $2,010.000
d- $2,050.000
e- $2,055.000