Given the following amortization schedule for available-for-sale bonds, answer the questions that follow. Date Jan. 1, Year 1 Dec. 31, Year 1 Dec. 31, Year 2. Dec. 31, Year 3... Stated Interest Market Interest $210.00 210.00 210.00 $233.81 235.72 237.78 Required a. Were the bonds purchased at a discount or premium? Amortization Bond Amortized Cost $2,922.69 2,946.50 2,972.22 3,000.00 $23.81 25.72 27.78

88 MULTIPLE CHOICE Question 6 Listen If f(x)= and g(x) = x²-16, then what is the value of f(g(4))? A 0 B 4 C undefined

Q2) 4. What is sensitivity analysis?

Problem 9-25 Fudge factors An oil company executive is considering investing $10.1 million in one or both of two wells: well 1 is expected to produce oil worth $3.01 million a year for 10 years; well 2 is expected to produce $2.01 million for 15 years. These are real (inflation-adjusted) cash flows. The beta for producing wells is 0.91. The market risk premium is 9%, the nominal risk-free interest rate is 7%, and expected inflation is 3%. The two wells are intended to develop a previously discovered oil field. Unfortunately there is still a 21% chance of a dry hole in each case. A dry hole means zero cash flows and a complete loss of the $10.1 million investment. Ignore taxes and make further assumptions as necessary. a. What is the correct real discount rate for cash flows from developed wells? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) Real discount rate b. The oil company executive proposes to add 20 percentage points to the…