1. Wing Air, Inc. has a project with the following cash flows: Required Return of 10%. Annual cash flows: Year 0 $(23,000) Year 1 $9,500 Year 2 $10,300 Year 3 $6,500 What is the internal Rate of Return (IRR)?
2. You are in the 35% tax bracket. A corporate bond pays 5.0% and a tax-free municipal bond pays 3.5%. Which bond should you buy? At what muni bond rate would you have an equal choice between the two?
3. A firm has an ROE of 3%, a debt-to-equity ratio of 0.5, a tax rate of 35%, and pays an interest rate f 6% on its debt. What is its operating ROA?