With $10,000 available, you have two investment options. The first option is to buy a certificate of
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With $10,000 available, you have two investment options. The first option is to buy a certificate of deposit from a bank at an interest rate of 10% annually for five years. The second choice is to purchase a bond for $10,000 and invest the bond’s interest payments in the bank at an interest rate of 9%. The bond pays 10% interest annually and will mature at its face value of $10,000 in five years. Which option is better? Assume your MARR is 9% per year.
MARRMinimum Acceptable Rate of Return (MARR), or hurdle rate is the minimum rate of return on a project a manager or company is willing to accept before starting a project, given its risk and the opportunity cost of forgoing other... Face Value
Face value is a financial term used to describe the nominal or dollar value of a security, as stated by its issuer. For stocks, the face value is the original cost of the stock, as listed on the certificate. For bonds, it is the amount paid to the...
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Option 1 Buy a certificate Option 2 Purchase a bond and assume ...View the full answer
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