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1)Assume an investment of $100 earns an APR of 5% compounded annually

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1)Assume an investment of $100 earns an APR of 5% compounded annually. Calculate the balance after 190 years. (Round your answer to the nearest cent.)

2)When estimating the FCF of a project, you are expected to estimate “incremental” FCF – explain what the phrase “incremental” means and why you need to calculate the “incremental” FCF to evaluate a project?

What three attributes of these incremental FCFs matter? How are these attributes incorporated in the capital budgeting process?

3)What would be the profit or loss per share of stock to an investor who bought the
October maturity IBM call option with exercise price $100, if the stock price at the
expiration of the option is $104? What about a purchaser of the put option with
the same exercise price and maturity?

4)Johnson bought a nursing home from Gonzales. The price was $15,000,000 and included a purchase money mortgage from Johnson for $12,000,000 at 5 3⁄4 % for 25 years when market interest rates were 9 %. Shortly after his purchase, Johnson had his property appraised because he thought his new real estate taxes were too high. The appraiser concluded the property was worth $12,000,000. Johnson was very upset. What is going on?