1. The asking price of an asset is $750,000. It is an old building and will be demolished at the end of 10 years with the land worth $200,000 at that time. The expected annual cash flows for the next 10 years are $150,000 per year. Your required rate of return is 14%. What is the property worth to you today?
A. $750,000 B. $782,417 C. $836,366 D. $1,075,000
2. From a corporations point of view,
a) interest payments to debenture holders are not tax deductible b) interest payments to suppliers are tax deductible c) dividend payment to preferred shareholders are tax deductible d) all of the above