Rearden metal is considering the purchase of a new blast furnace costing a total of $5 million dollars. this furnace will qualify for accelerated depreciation: 20% can be expense immediately, followed by 32%, 19.2%, 11.52%, 11.52% and 5.76% over the next five years. however, because of rearden's substantial tax loss carry forwards, rearden estimates its marginal tax rate to be only 10% over the next five years. since rearden will get very little tax benefit from the depreciation expense, they consider leasing the furnace instead. suppose that rearden and the lessor face the same 8% borrowing rate, but the lessor has a 40% marginal tax rate. assume that the furnace is worthless after five years, the lease term is five years, and a lease would qualify as a true tax lease. assuming that rearden's annual lease payments are $1.2 million, then the amount of the savings in year 0 from leasing is closest to: group of answer choicesa. 8.0%b. 12.8%c. 15.4%d. 5.0%

Risk is the risk of a decline in a bond's value due to an increase in interest rates. this risk is higher on bonds that have long maturities than on bonds that will mature in the near future. risk is the risk that a decline in interest rates will lead to a decline in income from a bond portfolio. this risk is obviously high on callable bonds. it is also high on short-term bonds because the shorter the bond's maturity, the fewer the years before the relatively high old-coupon bonds will be replaced with new low-coupon issues. which type of risk is more relevant to an investor depends on the investor's , which is the period of time an investor plans to hold a particular investment. longer maturity bonds have high risk but low risk, while higher coupon bonds have a higher level of risk and a lower level of risk. to account for the effects related to both a bond's maturity and coupon, many analysts focus on a measure called , which is the weighted average of the time it takes to receive each of the bond's cash flows. conceptual question: which of the following bonds would have the largest duration? a)10year-zero coupon bonds b)10year-7% annual coupon bonds c)10year-3% annual coupon bonds d)5year-3% annual coupon bonds e)3year-7% annual coupon bonds