Given the impact of the Coronavirus on economic activity in the United States, your small company has
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Question:
Given the impact of the Coronavirus on economic activity in the United States, your small company has decided to increase its investments in fixed-income instruments (bonds). An investment firm offers your company a perpetual bond for $20,000 and guarantees payments of $600 a year. Another investment firm offers your company a perpetual bond with a guaranteed rate of return of 4% per year if you invest $50,000.
a. : Which bond do you prefer and why?
b. : What level of payment is needed on an annual basis for the bond you did not select to become the preferred bond? In other words, what level of payment would it take for you to change your answer in (a)?
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