1. A bond has a par value of $1,000, a time to maturity of 10 years, and a coupon rate of 8.70% with interest paid annually. If the current market price is $870, what will be the approximate capital gain of this bond over the next year if its yield to maturity remains unchanged?
2. A manufacturing firm is considering a project which has an economic service life of one year with no salvage value. The initial cost for the project is $1,650. There is a 0.24 probability that the year-end revenue is $2,290. There is a 0.54 probability that the year-end revenue is $3,130. There is a 0.22 probability that the year-end revenue is $4,580. If the firm's MARR is 13%, what is the expected value of the project?