Engineering Economy 16th Edition by William Sullivan ,Elin Wicks, Koelling,

Exercise 10

What is the maximum price you will pay for a bond with a face value of $1,000 and a coupon rate of 14%), paid annually, if you want a yield to maturity of 10% Assume that the bond will mature in 10 years and the first payment will be received in one year. (Problem)
Problem
Josh Ritchey has just been hired as a cost engineer by a large airlines company. Josh's first idea is to quit giving complimentary cocktails, wine, and beer to the international flying public. He calculates this will save 5,000,000 drinks per year, and each drink costs $0.50, for a total of $2.5 million per year. Instead of complimentary drinks, Josh estimates that the airlines company can sell 2,000,000 drinks at $5.00 per drink. The net savings would amount to $12.5 million per year! Josh's boss really likes the idea and agrees to give Josh a lumpsum bonus now equaling 0.1 % of the present equivalent worth of three years of net savings. If the company's MARR is 20% per year, what is Josh's bonus