b) (10 points) Assume that you are still in part a, that is, at time 0! What is the promised yield of the European Bond today, if, you expect the exchange rate to stay the same (50% chance) or go down to $1 = 0.75 (50% chance) (Set the equation that will solve for the promised yield. Do not solve it)? 2. (25 points) You are offered a project with an initial cost of $10,000 that will be followed by a cash flow of $3,000 in each of the coming 5 years. a) (10 points) If you can make 10% per year in the market, what is the NPV, payback period, and discounted payback period of this project? ENG 111 FALL 2020 FINAL b) (10 points) Assume that you are considering investing $10,000 on this project today. Your friend is also considering investing $10,000, not on the project but on the market for 5 years. Her plan is to withdraw the interest that accumulates each year and reinvest it at 10%. Your friend claims that her investment's NPV is higher than the NPV of your project. Is she right? You need to support your answer numerically! c)(5 points) Inspired by your friend's plan, you counter by saying I will invest on the project and I will reinvest the cash flow I get each year on the market. This will give me even higher NPV than what I calculated in part (a) as the NPV of this project" Is this a financially sound/accurate argument. Support your answer numerically. 3. (25 points) You know the following information about Dani Co.'s current Income Statement and Balance Sheet: b) (10 points) Assume that you are still in part a, that is, at time 0! What is the promised yield of the European Bond today, if, you expect the exchange rate to stay the same (50% chance) or go down to $1 = 0.75 (50% chance) (Set the equation that will solve for the promised yield. Do not solve it)? 2. (25 points) You are offered a project with an initial cost of $10,000 that will be followed by a cash flow of $3,000 in each of the coming 5 years. a) (10 points) If you can make 10% per year in the market, what is the NPV, payback period, and discounted payback period of this project? ENG 111 FALL 2020 FINAL b) (10 points) Assume that you are considering investing $10,000 on this project today. Your friend is also considering investing $10,000, not on the project but on the market for 5 years. Her plan is to withdraw the interest that accumulates each year and reinvest it at 10%. Your friend claims that her investment's NPV is higher than the NPV of your project. Is she right? You need to support your answer numerically! c)(5 points) Inspired by your friend's plan, you counter by saying I will invest on the project and I will reinvest the cash flow I get each year on the market. This will give me even higher NPV than what I calculated in part (a) as the NPV of this project" Is this a financially sound/accurate argument. Support your answer numerically. 3. (25 points) You know the following information about Dani Co.'s current Income Statement and Balance Sheet