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12% 5. (a) An investor purchases a bond with a PAR value of 10,000. It is purchased on the bond market for 9400. The bond

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12% 5. (a) An investor purchases a bond with a PAR value of 10,000. It is purchased on the bond market for 9400. The bond rate is 3% paid quarterly. The desired rate of return is % annual. The bond is held for 4 full years and immediately sold. What is the selling price that would achieve this rate of return ? (b) What is the effective annual interest rate if the nominal interest rate is 18 percent per year compounded quarterly? Show the pertinent calculation. (Unrelated to A)) Gebove (c) A company wishes to use Future Worth to compare two projects. Project A has an initial cost of 70,000. The annual expenses are 4000. the expected revenue is 20,000 per year. The project will last 12 years. Equipment Salvage value will be 6000. Project B has a startup cost of 60,000. The revenue will be constant over 5 years at 30,000. Expenses each year will grow from 1000 in year one, increasing each year by 1,200. Salvage value will be 5000. 1-6% for both projects. What is the future worth of each project

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