1. The Blueberry Company is considering a project which will cost $336 initially. The project will not produce any cash flows for the first 3 years. Starting in year 4, the project will produce cash inflows of $403 a year for 4 years. This project is risky, so the firm has assigned it a discount rate of 17 percent. What is the net present value?

2. Consider a five-year bond with a 6% coupon selling at a yield to maturity of 8%. If interest rates remain constant, one year from now the price of this bond will be:

Bond   Coupon          Time to Maturity Yield to Maturity Rank (highest = 1, lowest = 5)

A         15%                 20 years               10%             _______

B         15%                 15 years               10%             _______

C         0%                   20 years               10%             _______

D         8%                   20 years               10%             _______

E          15%                 15 years               15%             _______