1. Huano Inc. is considering two mutually exclusive projects, A and B. Project A cost $95,000 and Ian expected to generate $65,000 in one year and $75,000 in year two. Project B cost $120,000 and is expected to generate $64,000 in year one, $67,000 in year two, $56,000 in year three, and $45,000 in year four. Huano, Inc required rate for return these projects is 10%.

The internal rate of return for Project A is:

The net present value for Project A is:

The net present value for Project B is:

Based on the criteria calculated, Huano Inc should accept:

2. What’s the yield to maturity of a corporate bond with 17 years to maturity , coupon rate of 7% per year, $1,000 par value, and a current market price of $940? Assume semi annual coupon payments.