Investor set on loan if all risk premiums are zero

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Reference no: EM131871461

1. An investor desires to earn a real interest rate of return of 6%. If the expected rate of inflation is 5%, whatnominal rate of interest would the investor set on a loan if all risk premiums are zero?

a. 1%

b. 5%

c. 6%

d.11%

e. 13%

2. An asset that has a book of $5,500 could be sold for $10,000 at the end of the project life. At the beginning of the project the company invested $3,500 in net working capital. The tax rate is 40%. The net salvage value is:

$8,000

$2,700

$6,200

$11,700

Reference no: EM131871461

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