3rd question

1. A firm is considering buying another company. The acquisition will increase revenues by 510,000 per year for 5 years. If the appropriate discount rate is 15%, what is the value of this acquisition? (Hint: Find the present value of the cash flows.) 4. A bond has annually). If rates for sim the bond? 5. A zero coup

3. The 1-year interest rate is 6%. The 1-year interest rate expected in 1 year is 8%. The 1-year interest rate expected in 2 years is 10%. What are the 2-year and 3-year interest rates predicted by the pure expectations theory?