The Present value of an infinite stream of dollar payments of $z (that starts next year) is $z/I when the nominal interest rate, I, is constant. This formula gives the price of a consol -a bond paying a fixed nominal payment each year, forever. It is also a good approximation for the present discounted value of a stream of constant payments over long but not infinite periods, as long as i is constant 1.1. Suppose i-1096. Let $z-100, what is the present value of the consol? 12. ifi-10%, what is the expected present discounted value of a bond that pays $z over the next 10 years? 20 years? 30 years? (Hint: Use the formula from Chapter 14, but remember to adjust for the first payment. 1.3. Repeat the calculations in (1.1) and (1.2) for i-2% and 1-5%.

Michigan mattress company is considering the purchase of land and the construction of a new plant. the land, which would be bought immediately (at t = 0), has a cost of $100,000 and the building, which would be erected at the end of the first year (t = 1), would cost $500,000. it is estimated that the firm's afterminustax cash flow will increase by $100,000 starting at the end of the second year, and that this incremental flow would increase at a 10 percent rate annually over the next 10 years. what is the approximate payback period?

Suppose that jim plans to borrow money for an education at texas a& m university. jim will need to borrow $25,000 at the end of each year for the next five years (total=$125,000). jim wishes his parents could pay for his education but they can’t. at least, he qualifies for government loans with a reduced interest rate while he is in school. he has a special arrangement with aggiebank to lend him the money at a subsidized rate of 1% over five years without having to make a payment until the end of the fifth year. however, at the end of the fifth year, jim agrees to pay off the loan by borrowing from longhorn bank. longhorn bank will lend him the money he needs at an annual interest rate of 6%. jim agrees to pay back the longhorn bank with 20 annual payments and the payments will be uniform (equal annual payments including principal and interest). (i) calculate how much money jim has to borrow at the end of 5 years to pay off the loan with aggiebank. a. $121,336 b. $127,525 c. $125,000 d. $102,020 e. none of the above

Is exploiting a distinctive competence or improving efficiency for competitive advantage. (a) cooptation (b) coalition (c) competitive intelligence (d) competitive aggression (e) smoothing