A bond issued by Liberty, Inc. 10 years ago has a coupon rate of 8% and a face value of $1,000. The
bond will mature in 15 years. What is the value to an investor with a required return of 12.5%?
A) $658.94 B) $750.86 C) $800 D) $701.52
D
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An example of a non-cash investing or financing activity that is disclosed in a supplementary schedule accompanying the statement of cash flows is:
A. Recording depreciation expense for the current year. B. Declaring, but not paying, dividends on common stock. C. Selling land in exchange for a note receivable. D. Transferring cash from a checking account into a money market fund.
A company is contemplating investing in a new piece of manufacturing machinery. The amount to be invested is $170,000. The present value of the future cash flows is $185,000. The company's desired rate of return used in the present value calculations was 10%. Which of the following statements is true?
A) The project should not be accepted because the net present value is negative. B) The internal rate of return on the project is less than 10%. C) The internal rate of return on the project is more than 10%. D) The internal rate of return on the project is equal to 10%.