1. Three alternative machine models are being considered for an ongoing operation. The three alternatives can be used in the production of the same product. Therefore, the selection among the three will be based on total costs. Model A costs $218,000 and will last 5 years. Its real operating cost is $19,400/year. Model B costs $225,000 and will last 6 years. Its real operating cost is $19,600/year. Model C costs $208,000 and will last 4 years, Its real operating cost is $21,100/year. It is determined that the real opportunity cost of capital is 6.5%. Rank the three models from the best choice to the least choice.

   	A.	Best C, B, A Least
   	B.	Best C, A, B Least
   	C.	Best A, B, C Least
   	D.	Best B, C, A Least
   	E.	Best B, A, C Least
   	F.	Best A, C, B, Least

2. A bond's price is quoted as $106 per $100 par value. (also quoted as 106 percent of par value). What do we know about the bond?

   i The bond is selling at discount.

   II The bond is selling at premium.

   III The bonds coupon rate is less than its yield to maturity.

   IV The bond's coupon rate is greater than its yield to maturity.

   V The bond's price will rise as the bond approaches maturity.

   VI The bond's price will fall as the bond approaches maturity.

   	A.	I, III, and V
   	B.	II, IV, and V
   	C.	I, IV, and VI
   	D.	II, IV, and VI
   	E.	I, III, and VI