8 What is the projects IRR. 15.07% OK. This is difficult. What you're solving for here is the discount rate b. 20.13% that will make NPV zero. You can do this using Excel, or a financial C. 25.25% calculator. It is very difficult to do long-hand. Don't worry if you can't get it yet, d. 30.06% we'll make this a bonus questions. Expect this one on the final exam. 9 A $10,000 zero coupon bond, with eleven (11) years to maturity is selling for $8,876.00 Calculate this bonds yield to maturity. 7.03% b. 6.09% OK, you've seen this one before. Solve for r for a lump sum question. 5.79% 1.09% 10 In capital budgeting, when one project is accepted, and the others being considered can be accepted as well, we call these potential projects; mutually exclusive b. mutually independent c. independently mutual d. independent 11 A bond with a $10,000 par value has an 6.35% coupon rate. It will mature in 9 years, and coupon payments are made "semi-annually". Present annual yields on similar 6.56%. What should current price be; 9,851.25 Look out! This is a semi-annual coupon payment bond. We'll need to b. 9,858.95 divide the rate by two (frequency of compounding) and multiply the term by two. C. 9,863.35 Semi-annual is twice (2) per year. We'll help with the answer on this one too! d. 9,872.25 Expect more of these on future quizzes (semi annual) 12 Using Internal Rate of Return (IRR) for analysis can be flawed because the discount rate can be overstated b. project cash flows are expected to be reinvested at the internal rate of return c. the project's cash flows can be back loaded d interest rates can change over time for extended projects 13 The discount rate which forces a projects NPV to equal zero is a the prime rate b the crossover rate the mastrandrea rate