How much return will investment earn

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Question 1: Mr. Nailor invests $23,000 in a money market account at his local bank. He receives annual interest of 9% for 8 years. How much return will his investment earn during this time period? Use Appendix A to calculate the answer.

  1. $11,546
  2. $22,839
  3. $43,523
  4. $45,839

Question 2:  A 17-year zero-coupon bond was issued with a $1,000 par value to yield 11%. What is the approximate market value of the bond? Use Appendix B. (Round "PV Factor" to 3 decimal places and final answer to the nearest dollar amount.)

  1. $340
  2. $128
  3. $170
  4. $255

Question 3: Tobin's Barbeque has a bank loan at 10% interest and an after-tax cost of debt of 6%. What will the after-tax cost of debt be when the loan is due if a new loan is taken out yielding 11%. (Do not round intermediate calculations. Round your answer to 2 decimal places.)

  1. 6.60%
  2. 11.65%
  3. 4.05%
  4. None of these options are true

Reference no: EM132467408

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