Two mutually exclusive alternatives-bond face value

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Reference no: EM131101290

1. Interest payments on a bond are $500 twice a year. If the bond interest rate is 5% per year compounded semiannually, the bond face value is:

a. $60,000

b. $10,000

c. $15,000

d. $20,000

2. Two mutually exclusive alternatives, A and B, are to be evaluated by the ROR method. The initial investment for alternative B is greater than that of alternative A. If the overall ROR of both alternatives A, and B, is greater than the MARR, then:

a. Select alternative A because it has a lower initial investment cost.

b. Select alternative B because it has a higher initial investment cost.

c. Conduct an incremental analysis and select A if the ROR of the increment exceeds the MARR

d. Conduct an incremental analysis and select B if the ROR on the increment exceeds the MARR.

Reference no: EM131101290

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