1. Suppose you decide that you want to retire with at least $1 million in your retirement account. If you plan to work for 40 years before you retire, how much would you have to contribute every month to your retirement account if you are paid 10.88% APY on your investments?
2. If a bond pays a $47 coupon, a $1000 face value, and matures in 9 years, what is the market price now if the market requires a yield to maturity of 6.35%?
3. Which of the following statements about capital budgeting rules is true?
a. A capital budgeting rule either agrees with the NPV rule or it is incorrect.
b. The most important and difficult part of capital budgeting is estimating the cost of capital.
c. Sometimes one capital budgeting rule is correct, and sometimes a different one will be correct.
d. There is no difference between NPV, IRR, profitability index, and discounted payback in practice.