Answer Happy

Which of the following bonds is trading at a premium (above face value)? Multiple Choice a 15-year bond with a $10,000 face value whose yield to maturity is 8.0% and coupon rate is 7.8% APR paid semiannually a two-year bond with a $50,000 face value whose yield to maturity is 5.2% and coupon rate is 5.2% APR paid monthly a five-year bond with a $2,000 face value whose yield to maturity is 7.0% and coupon rate is 7.2% APR paid semiannually a ten-year bond with a $4,000 face value whose yield to maturity is 6.0% and coupon rate is 5.9% APR paid semiannually

Which of the following bonds is trading at a premium (above face value)? Multiple Choice a 15-year bond with a $10,000 face value whose yield to maturity is 8.0% and coupon rate is 7.8% APR paid semiannually a two-year bond with a $50,000 face value whose yield to maturity is 5.2% and coupon rate is 5.2% APR paid monthly a five-year bond with a $2,000 face value whose yield to maturity is 7.0% and coupon rate is 7.2% APR paid semiannually a ten-year bond with a $4,000 face value whose yield to maturity is 6.0% and coupon rate is 5.9% APR paid semiannually

A firm is considering the purchase of equipment costing $250,000. Assume the equipment is depreciated straight-line over a 5-year useful life. The firm estimates the equipment will generate $88,000 in yearly incremental after-tax cash flows for 4 years. At the end of the project, the equipment will be sold for $75,000. If the tax rate is 20%, what is the after-tax cash flow generated from the sale of the equipment (in year 4). Multiple Choice $70,000 $75,000 $50,000 $60,000

When calculating a project's yearly cash flows, the interest payments on any debt issued to finance the project should be included in the incremental cash flows to correctly find the NPV of the project. True or False True False