How much should you be willing to pay for zero-coupon bond

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Reference no: EM131927027

1. How much should you be willing to pay for a zero-coupon bond that earns 3% per year and pays $1000 in 10 years?

$744.09

$1,343.92

$8,530.20

$751.31

None of these

2. Relay Contractors purchased a sheep foot roller three years ago for $70,000. It was projected to have a useful life of 10 years and a salvage value of $15,000. Due to the intensity of the work, the roller had to be upgraded for 10,000 one year ago. It can be sold today for $42,000 but will need a $ 15,000 upgrade to last 7 more years. What is your value of P (the first cost in your analysis) if the company decides to keep the roller for 7 more years?

$70,000

$72,000

$57,000

$42,000

Reference no: EM131927027

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