Calculating the present value of an investment

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Reference no: EM13826594

Problem:

1. What is the present value (PV) of an investment that will pay $4000 in one year's time and $400 every year after that, when the interest rate is 5% per year?

A. $2400

B. $3600

C. $7200

D. $8000

2. You are considering investing in a zero-coupon bond that will pay you its face value of $1000 in ten years. If the bond is currently selling for $485.20, then the internal rate of return (IRR) for investing in this bond is closest to:

A. 12%

B. 8.0%

C. 7.5%

D. 10%

Summary of question:

These short questions belong to Finance. The 1st question is about calculating the present value of an investment. The 2nd question is about calculating the internal rate of return for a zero-coupon bond.

Reference no: EM13826594

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