Question

2. (a) A Bond has a face value (PAR) of 10,000. t pays a an 8% yearly rate. You will hold it for S years and then plan to sell it at 1200.You want obtain an investment return of 12%/year. If your wishes are met what isthe maximum amount you can pay for the bond at t 0. As part of the solution you must give the governing equation and show how you are using each term. quarterly dividend (bond rate) at (b ). A machine costs 500,000. It will generate a revenue of 400,00 per year with expenses of 50,00 per year. The salvage value decreases linearly from t O until t 20 when t Value is 10,000. You choose a planning horizon of 12 years with an interest rate of n the Salvage the annualized worth of this system (c). The inflation rate is running at 3% per year at this time, what must your salary percentage increase be in order to for your real purchasing power to increase by 7%?

Answer 1

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