Question 1:

One of your friends purchased a zero coupon corporate bond (i.e., a bond that has no interest payments) for $4,850. The bond has a face value of $25,000 and is due in 15 years. If the bond is held to maturity, what rate of return will your friend make on the investment?

Question 1 options:

a.11.55%

b.415.00%

c.8.07%

d.The rate of return cannot be calculated with the information given.

Question 2:

The State of Georgia decided to fund a program for restoring and maintaining local museums. The first cost is $250,000 now, and an additional cost of $80,000 every 8 years forever. The perpetual equivalent annual worth (in years 1 through infinity) of this program at an interest rate of 20% per year is equal to: **The answers presented below were calculated using the appropriate factors from interest tables including all their decimal places**

Question 2 options:

a.-$31,996

b.-$130,000

c.-$54,849

d.-$70,001