1. A bond has a coupon rate of 7%, a maturity date of 5 years in the future, and a par value of $1,000. The Yield to Maturity (market rate of return) is 8.5%.
What is the annual coupon payment associated with this bond?
2. A firm is considering investing in a project. The firm has a WACC of 14%. This project costs $6,000 and is expected to product positive cash flows of $1,000 for 7 years.
What is the Payback Period?