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Let’s say that a new-issue treasury bond was selling on July 20th 2016 for $1,000. It had a 1,000 face value and a $50 coupon payment.
On July 21st 2016, you purchased the bond for $990 and then held it for one year, collecting its first coupon payment and then selling it immediately afterwards. If the Yield Curve did not change at all after July 21st 2016, then what actual annual return or yield did you earn on this bond over your 1-year holding period? (Hint: No calculations are necessary to answer this question.)
a. A return of 5%.
b. A return of more than 5%.
c. A return of less than 5%.
d. The return could have been higher than, equal to, or lower than 5%.
A project being considered is a semiautomated packing unti that would cost $390,000 including installation. This project would use the 7 year MACRS schedule with no residual value. What is the NPV of the packing machine?
Oklahoma Instruments has a bond issue outstanding that pays $70 annually. It has a face value of $1,000, and it will mature in eight years. Similar bonds are priced to yield 6.5%. What would you expect this bond to sell for? If you held this bond unt..
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Springfield nuclear energy inc. bonds are currently trading at $1,852.75. The bonds have a face value of $1,000, a coupon rate of 9.5% with coupons paid annually, and they mature in 20 years. What is the yield to maturity of the bonds?
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Consider an asset that costs $624,000 and is depreciated straight-line to zero over its eight-year tax life. The asset is to be used in a five-year project; at the end of the project, the asset can be sold for $173,000. If the relevant tax rate is 35..
The main TVM problems relating to healthcare are: a) present value of a lump sum b) present value of an annuity stream c) future value of a lump sum d) future value of an annuity stream. The loan will be fully amortized over the next 30 years. Curren..
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