Question

please answer all 3!

QUESTION 8 Abond selling at a discount will always have a coupon rate that is greater than the bond's yield-to-maturity. True False QUESTION 9 "Assume you are evaluating 3 mutually exclusive investment projects, the NPV rule and IRR rule will give the same absolute yes/no decision on each project and will also generate the same relative rankings (.e. they will agree on what is the best and what is the worst project." True False QUESTION 10 Assume that you have 40 years until retirement and have just started your first job. Once you retire, you anticipate that you will live for 30 additional years. Assume that you will require $100,000 per year to support yourself in retirement. All investments that you make will go into and stay in an account that returns 0.071 per year (e. however much you have at retirement will sit in that account and continue to accrue interest on the remaining balance. How much will you have to save each year over the next 40 years to meet your goal? Assume that your first investment occurs at the end of your first year of work lyr 1) and that the last of your 40 investments occurs on the last day that you are employed yr 40). For simplicity, assume that your first withdrawal is at the end of your first retirement year [yr 41)

Answer 1

8) False

When the bond is selling at a discount the coupon rate is less than the yield to maturity rate.

9) False

In the case of mutually exclusive projects the results can be conflicting and does not always give the same results but in the case of independent project it will give the same results.

10) we first calculate the present valeu of the withdrwal at the age 40 total number of withdrawal = 30 Amount 100,000.00 Interest 0.071 or 7.1% PV(7.1%,30,-100000) 1,228,539.78 Now we use the excel PMT formula to determine the annual deposit for the next 40 years PMT(7.1%,40,0,1228539.78) 5,997.17 the annual amount that needs to be deposited is 5,997.17