A municipal bond is being offered for sale for $250,000. The bond pays no interest (as is the case for many municipal bonds) during its 20 year life. At the end of 20 years, the owner of the bond will receive a lump sum payment of $600,000. The bond yield is approximately

Question 1 options:

4.47%;

8.94%

41.67%

None of the above

Calculate the present worth of a 4.5% nominal rate, $5000 bond with interest paid semiannually. The bond matures in 10 years, and the investor wants to make an 8% per year compounded quarterly on the investment.

Question 2 options:

$2133

$3233

$3787

$5204

he following costs are associated with three tomato peeling machines being considered for use in a canning plant. If the canning company uses an interest rate of 12%, which is the best alternative? Use NPV to make your decision. (Hint: consider the least common multiple as the study period).

Machine	A	B	C
First Cost	$52,000	$63,000	$67,000
Maintenance and Operating Costs	15,000	9,000	12,000
Annual Benefit	38,000	31,000	37,000
Salvage Value	13,000	19,000	22,000
Useful Life in Years	4	6	12

Question 6 options:

	Machine A
	Machine B
	Machine C
	Either B or C, NPV is indifferent.