Answer:
Explanation:
interest rates on a three-year bond =(int in year1+int in year2+int in year3)/n = (3+4.5+6)/3 =4.8%
interest rates on a six-year bond = (3%+4.5%+6% +7.5%+ 9%+ 10.5%)/6 = 7.35%
interest rates on a nine-year bond = (3%+4.5%+ 6%+ 7.5%+ 9%+ 10.5%+ 13%+ 14.5%+16%)/9 =10.23%
So, int rate on a 3 year bond is 4.8%; on a 6 year bond is 7.35%; on a 9 year bond 10.23%
Answer:
The correct answer is option C.
Explanation:
Giving the following information:
The initial investment of $350,000. The investment would generate annual cash inflows of $133,000 for the life of the project, which is 4 years. At the end of the project, equipment that had been used in the project could be sold for $32,000. The company’s discount rate is 14%.
We need to use the following formula:
NPV= -Io + [Cf/(1+i)^n]
Io= 350,000
1= 133,000/1.14
2= 133,000/1.14^2
3= 133,000/1.14^3
4= 165,000/1.14^4
NPV= $56,470.31
Answer:
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