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Consider an eight-year, 13 percent annual coupon bond with a face value of $1,000. The bond is trading at a rate of 10 percent.
1. What is the price of the bond
2. If the rate of interest increases by 1% what will the bonds new price be?
3. Using your answers to party 1 & 2 what is the percentage change in the bonds price as a result of the 1% increase in interest rates?
4. Repeat parts 2 & 3 assuming a 1% decrease in interest rates, what with the bonds new price be? and what is the percentage change?
Compute the internal rate of return for both projects. Compute the NPV for both projects, using a cost of capital of 10 percent.
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A project has an initial outlay of $2,774. It has a single cash flow at the end of year 4 of $4,755. What is the internal rate of return (IRR) for the project? The Black Bird Company plans an expansion. The expansion is to be financed by selling $61..
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