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9. The face value of a bond is $3000.00. The firm offering the bond pays 1% of the sales price to the selling agency and will pay $300.00 to the buyer every year. The bond matures in ten years and the firm pays $3000.00 to the buyer at the end of the tenth year. What is the effective rate of return on this bond to the firm offering it? a) 11.10% b) 12% c) 10.18% d) 10.56%

9. The face value of a bond is $3000.00. The firm offering the bond pays 1% of the sales price to the selling agency and will pay $300.00 to the buyer every year. The bond matures in ten years and the firm pays $3000.00 to the buyer at the end of the tenth year. What is the effective rate of return on this bond to the firm offering it? a) 11.10% b) 12% c) 10.18% d) 10.56%

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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9. The face value of a bond is $3000.00. The firm offering the bond pays 1% of the sales price to the selling agency and will pay $300.00 to the buyer every year. The bond matures in ten years and the firm pays $3000.00 to the buyer at the end of the tenth year. What is the effective rate of return on this bond to the firm offering it? a) 11.10% b) 12% c) 10.18% d) 10.56% 10- Two alternatives are considered for a project that lasts for 3 years. Alternative A has an initial cost of $25000.00 and results in savings of $9000.00 every year starting at the end of 1" year. Alternative 2 has an initial cost of $32072.50 and results in $11,500.00 savings per year, starting the end of the 1* year. If this is considered an investment for the firm, what should be the minimum attractive rate of return (MARR) for the firm for choosing Alternative B? a) 4% b) 5% c) 6% d) 3%
Transcribed Image Text:9. The face value of a bond is $3000.00. The firm offering the bond pays 1% of the sales price to the selling agency and will pay $300.00 to the buyer every year. The bond matures in ten years and the firm pays $3000.00 to the buyer at the end of the tenth year. What is the effective rate of return on this bond to the firm offering it? a) 11.10% b) 12% c) 10.18% d) 10.56% 10- Two alternatives are considered for a project that lasts for 3 years. Alternative A has an initial cost of $25000.00 and results in savings of $9000.00 every year starting at the end of 1" year. Alternative 2 has an initial cost of $32072.50 and results in $11,500.00 savings per year, starting the end of the 1* year. If this is considered an investment for the firm, what should be the minimum attractive rate of return (MARR) for the firm for choosing Alternative B? a) 4% b) 5% c) 6% d) 3%
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