Question: 1. Project I Year 0 1 2 3 4 5 6 7 8 9 10 CF -188,000 18,500 19,000 29,500 31,000 35,000 42,000 36,000 55,000
1.
Project I
| Year | 0 | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 |
| CF | -188,000 | 18,500 | 19,000 | 29,500 | 31,000 | 35,000 | 42,000 | 36,000 | 55,000 | 60,000 | 59,000 |
Project II
| Year | 0 | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 |
| CF | (188,000) | 19,000 | 28,400 | 39,400 | 25,000 | 32,000 | 31,000 | 39,000 | 52,000 | 59,000 | 62,000 |
The firm is willing to accept any project that would produce a minimum rate of return of 4.89%. Which project do you recommend? why?
Please no excel answers
2. Manage a $200 million portfolio of corporate bonds. Your customers are concerned about the rate of return on corporate bonds. Based on the given situation (i.e., the interest rates are expected to fall), what adjustments should you make to your portfolio?
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