Reference no: EM133001401

Questions -

Q1. A ?$17,000?, 6.5?% bond redeemable at par is purchased 9 years before maturity to yield 9.9% compounded semi-annually. If the bond interest is payable semi-annually, what is the purchase price of the? bond?

Q2. A ?$120,000 bond bearing interest at 4.5?% payable semi-annually is bought four years before maturity to yield 3.75?% compounded quarterly. If the bond is redeemable at? par, what is the purchase? price?

Q3. A ?$24,000?, 7?% bond redeemable at par with interest payable annually is bought 10 years before maturity. Determine the premium or discount and the purchase price of the bond if the bond is purchased to yield

?(a) 6?% compounded? annually;

?(b) 8?% compounded annually.

Q4. A ?$240,000 issue of five?-year bonds redeemable at par offers 8.28% coupons payable annually. What is the premium or discount and the purchase price of the bonds to yield 9.1% compounded semi-annually?

Q5. ?$7,000 bonds redeemable at par bearing 8% coupons payable annually are sold eleven years before maturity to yield 5.6% compounded quarterly. What is the premium or discount and the purchase price of the? bonds?

Q6. Please answer both the alternatives

A company must make a choice between two investment alternatives. Alternative 1 will return the company ?$35,000 at the end of two years and ?$75,000 at the end of eight years. Alternative 2 will return the company ?$10,000 at the end of each of the next eight years. The company normally expects to earn a rate of return of 9?% on funds invested. Compute the present value of each alternative and determine the preferred alternative according to the discounted cash flow criterion.

Q7. Please answer both the alternative - An unavoidable cost may be met by outlays of ?$90,000 now and ?$4,500 at the end of every six months for three years? (Alternative 1) or by making monthly payments of ?$1,970 for seven years? (Alternative 2). Interest is 12?% compounded annually. Compute the present value of each alternative and determine the preferred alternative according to the discounted cash flow criterion.

Q8. A contract offers ?$15,000 immediately and ?$65,000 in nine years? (Alternative 1) or ?$11,500 at the end of each of the next nine years? (Alternative 2). If money is worth 9?%, which offer is? preferable?

Q9. A car costs ?$16,200. ?Alternatively, the car can be leased for 4 years by making payments of ?$331 at the beginning of each month and then bought at the end of the lease for ?$4,191. If interest is 10?% compounded annually?, which alternative is? preferable?

Q10. A contract is estimated to yield net annual returns of ?$24,000 for nine years. To secure the? contract, an immediate outlay of ?$125,000 is required. Interest is 13?% compounded annually.

Calculate the net present value? (NPV) of the contract and determine whether the project should be accepted or rejected according to the net present value criterion.