The difference in the present value of bond

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1. The difference in the present value of bond A and bond B is $178.3265. Bond A has a face value of $ 1,000, a coupon rate of 10% and maturity of 3 years and Bond B is a zero coupon bond with a face value of $1,100 and duration of 3 years. If both bonds are priced using the same yield r. Calculate r.

2. An investment project has the cash flow stream of $-250(out flow today), $75(inflow year 1), $125(inflow year 2), $100(inflow year 3), and $50(inflow year 4). The cost of capital is 12%. What is the discounted payback period?

Reference no: EM131993424

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