1. You buy a 1-year put option and sell the corresponding call option. Both options are written on 1 share of IBM stock and both have an exercise price of $85. In addition, you also buy 1 share of IBM stock. What is the net payoff you receive from this 3-asset portfolio if at expiration the price of each share of IBM stock is $43?
2. You have an opportunity to invest $ 101 comma 000$101,000 now in return for $ 79,600 in one year and $ 29,500 in two years. If your cost of capital is 9.2%?, what is the NPV of this? investment?
3. A firm is considering the purchase of a $249,000 piece of equipment. This equipment is expected to produce cash flows of $69,500, $127,000, and $76,000 over the next three years. The rate of return on this equipment is: