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1) You need a particular piece of equipment for your production process

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1) You need a particular piece of equipment for your production process. An equipment-leasing company has offered to lease the equipment to you for $10,200 per year if you sign a guaranteed 5-year lease (the lease is paid at the end of each year). The company would also maintain the equipment for you as part of the lease. Alternatively, you could buy and maintain the equipment yourself. The cash flows from doing so are listed here: (the equipment has an economic life of 5 years). If your discount rate is 7.4%, what should you do?

What is net present value of leasing alternative?

What is net present value of buying alternative? 
 Data Table 
Year 0           Year 1          Year 2           Year 3         Year 4        Year 5 
- $39,600     - $1,800       - $1,800        - $1,800      - $1,800      - $1,800 
 

2)  A 8-year bond of a firm in severe financial distress has a coupon rate of 12% and sells for $950. The firm is currently renegotiating the debt, and it appears that the lenders will allow the firm to reduce coupon payments on the bond to one-half the originally contracted amount. The firm can handle these lower payments. What are the stated yields to maturity of the bonds before the renegotiation? What are the expected yields to maturity of the bonds after the renegotiation? The bond makes its coupon payments annually.