QUESTION $3$

Your firm is purchasing a new computer server that will last for five years. The firm can purchase the system for an upfront cost of

$$400,000.$ Alternatively, you can lease the server from the manufacturer for $$8,000$ paid at the end of each month. The lease price is

offered for a $60-$month lease with no early termination$-$you cannot end the lease early. Your firm can borrow at an interest rate of $6\%$ per

year with monthly compounding.

For what monthly lease value is the firm indifferent between buying and leasing the server?

A$.$ $$6654\mathrm{.}65$

B$.$ $$7733\mathrm{.}11$

C$.$ $$8877\mathrm{.}89$

D$.$ $$5644\mathrm{.}81$

QUESTION $4$

A risk$-$free bond with three years to maturity has a face value of $$1,000$ and pays annual coupons of $$50.$ The next coupon

will be paid a year from now and the last coupon is paid together with the face value. The bond's yield to maturity is $4\%.$

What is the bond price?

A$.$ $$1025\mathrm{.}251$

B$.$ $$1027\mathrm{.}751$

C$.$ $$1020\mathrm{.}000$

D$.$ $$1025\mathrm{.}000$