1. A business school is considering building a new Executive Education building. The building will cost $5.2 million, eligible for 100% bonus depreciation, and generate an estimated $1.1 million in revenue with operating costs of $200,000 each year over the next 5 years. The building will have a value of $2.6 million in five years time. If the University has a tax rate of 11%, what is the IRR of the proposal
- 11.8%
- 9.0%
- 11.2%
- 8.6%
- 4.4%
2. If GM Series A preferred shares pay a $4.40 per share dividend in perpetuity, and are trading for $110 per share, what is the yield (equivalently, expected return; equivalently, discount rate) on those shares?
- 4.4%
- 5.5%
- 8.0%
- 4.0%
- 3.2%