Topic: Assignment 9
Introduction
You should now be ready to do Assignment 9. Please review the “Guidelines for Assignments” in the “Assignments” section of the Course Overview to ensure that you follow the correct procedure for preparing and submitting your assignments. Once you have completed the assignment, submit it to your Open Learning Faculty Member and begin working on the next module. Please contact your Open Learning Faculty Member if you have any questions regarding the assignment.

This assignment is marked out of 100 marks and is worth 4% of your course grade.

Instructions

Part A: Evaluating Risk in the Capital Budgeting Decision (40 marks)
Complete Problem 26 on page 465 of Chapter 13 in your textbook.

Part B: Analysis of Financing Options (60 marks)

1.Complete part (a) of Problem 21 on pages 552–553 of Chapter 16 in your textbook. Do NOT complete part (b) of this problem. (30 marks)

2.Complete Problem 29 on page 554 of Chapter 16 in your textbook. (30 marks)

Hints for Doing Assignment 9

Part A: Problem 26
For parts (d) to (g), you need only provide a sentence or two referring to the answers from parts (a) to (c).

Part B: Problem 21
Follow the steps in the textbook and in the Fizz and Eddy bond refunding scenario to complete this question.

Part B: Problem 29
Note that the lease payments are an annuity in advance while the tax savings from leasing are an ordinary simple annuity. Following the format presented in the textbook example, which should provide some context. Be sure to consider the salvage value!