The second alternative suggests that five-year zero-interest loan and the new loan was to be repaying in 5 equal annual payments. And this alternative would save them well more than $2,000 in interest. So the alternative A is better than the alternative B to pay the mortgage.
3) A) If an investor invests $2 million in stock market to purchase shares the return is based on the market. Some time he will get high return on his investment some time he will get loss his investment. The return is based on the economic condition. But the investment in bond will generate constant return to the investor, the investor would get specific percentage of interest at particular period of time also he will get principle amount at the end of specific period of time.
Bid is the obtainable price at which the investor can sell his share. $1.5 million is the price that the buyer is willing to pay. Minimum bid price $1.3million has already placed, even there is $1.5 million bid I would not sell at $1.5 million I will hold the investment because the Wall Street financial analyst predicted that the successful bid is $ 2.1 million. The investment is also depending the tax imposed by the government authorities.
B) In my point in July 1 1992 the capital market provides fair market value to the investment. The investor gained better yield for their investment and the approximate market fair value of the ticket will be $1.5 million because there has been minimum bid for $1.3 million so the fair value would be $1.5 million for the ticket.
C) If tax rate is increased for the bond investment it will decrease the return from this bond investment. Then I would prefer the investment in other investment options like shares, mutual fund etc. If tax rate is increases, for the investment in corporate bond that I would make valuation on the bond based on face value. If tax rate is increased then I would choose