A corporate bond has a coupon rate of 9%, a face value of $1,000, and matures in 15 years. Which of
the following statements is MOST correct?
A) An investor with a required return of 10% will value the bond at more than $1,000.
B) An investor who buys the bond for $900 will have a yield to maturity on the bond greater
than 9%.
C) An investor who buys the bond for $900 and holds the bond until maturity will have a capital
loss.
D) If the bond's market price is $900, then the annual interest payments on the bond will be $81.
B
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Which of the following errors occur when a rater compares an individual, not against an objective standard, but against other employees?
A. Contrast errors B. Distributional errors C. Halo errors D. Leniency errors E. Horns errors
Door to Door Moving Company is considering purchasing new equipment that costs $720,000
Its management estimates that the equipment will generate cash flows as follows: Year 1 $218,000 2 218,000 3 258,000 4 258,000 5 150,000 Present value of $1: 6% 7% 8% 9% 10% 1 0.943 0.935 0.926 0.917 0.909 2 0.890 0.873 0.857 0.842 0.826 3 0.840 0.816 0.794 0.772 0.751 4 0.792 0.763 0.735 0.708 0.683 5 0.747 0.713 0.681 0.605 0.621 The company's annual required rate of return is 8%. Using the factors in the table, calculate the present value of the cash inflows. (Round all calculations to the nearest whole dollar.) A) $38,804 B) $774,000 C) $884,000 D) $885,326