IE342_Fall2020_HW2.pdf Ana Sayfa Aralar IE342_Fall2020_H... X Oturum A 1 / 2 eine do Payla 1E342 Fall 2020-2021 Homework 2 "By submitting this homework, I hereby pledge on my honor that the work done on this homework is solely my own and I have not given and/or received any aid on this homework". This homework is worth 5% of your overall grade. Question 1 lu a) Suppose you have the choice of investing in (1) a zero-coupon bond, which costs $513.60 today, pays nothing during its life, and then pays $1,000 after five years, or (2) a bond that costs $1,000 today, pays $113 in interest semiannually, and matures at the end of five years. Which bond would provide the higher yield? b) Suppose you purchased the second bond. If you want to sell at the end of three years and six interest payments, what should the selling price be to yield a 10% return on the investment? Question 2 Koza Automotive purchased a CNC machine for $20,000 in year 0. The useful life of the machine is 10 years, at the end of which the machine is estimated to have a salvage value of zero. The machine | 215,9 x 279,4 mm 1 tv IE342_Fall2020_HW2.pdf Ana Sayfa Aralar IE342_Fall2020_H... X Oturum A 1 / 2 eine do Payla 1E342 Fall 2020-2021 Homework 2 "By submitting this homework, I hereby pledge on my honor that the work done on this homework is solely my own and I have not given and/or received any aid on this homework". This homework is worth 5% of your overall grade. Question 1 lu a) Suppose you have the choice of investing in (1) a zero-coupon bond, which costs $513.60 today, pays nothing during its life, and then pays $1,000 after five years, or (2) a bond that costs $1,000 today, pays $113 in interest semiannually, and matures at the end of five years. Which bond would provide the higher yield? b) Suppose you purchased the second bond. If you want to sell at the end of three years and six interest payments, what should the selling price be to yield a 10% return on the investment? Question 2 Koza Automotive purchased a CNC machine for $20,000 in year 0. The useful life of the machine is 10 years, at the end of which the machine is estimated to have a salvage value of zero. The machine | 215,9 x 279,4 mm 1 tv