Reference no: EM132911078

Question -

Q1. Dan is considering the purchase of Super Technology, Inc. bonds that were issued 3 years ago. When the bonds were originally sold they had a 26-year maturity and a 14.06 percent coupon interest rate, paid annually. The bond is currently selling for $1,366. Par value of the bond is $1,000. What is the yield to maturity on the bonds if you purchased the bond today?

Q2. Great Lakes Clinic has been asked to provide exclusive healthcare services for next year's World Exposition. Although flattered by the request, the clinic's managers want to conduct a financial analysis of the project. There will be an up front cost of $160,000 to get the clinic in operation. Then net cash inflow of $1m million is expected from operations in each of the ther two years of the exposition. However, the clinic has to pay thed organizers fee, which must be paid at the end of the second year, is $2 million. What are the cash flows associated with the project? (b) What is the project's IRR? (c) Assuming a project cost of capital of 10 percent, what is the project's NPV?