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. What is the PV of the lease.

A$.$ $$569,887\mathrm{.}56$

B$.$ $$216,808\mathrm{.}79$

C$.$ $$233,881\mathrm{.}22$

D$.$ $$413,804\mathrm{.}49$

QUESTION $2$

A zero$-$coupon bond with three years to maturity has a face value of $$1,000.$ You buy the bond today and its

yield to maturity right now is $5\%.$ Suppose that you sell the bond exactly one year from today. At that point,

the yield to maturity has changed to $3\%.$ What is your holding period return?

A$.0\mathrm{.}08227$

B$.0\mathrm{.}09117$

C$.0\mathrm{.}08127$

D$.0\mathrm{.}09127$