Assume That Bunch Inc

question 103

Multiple Choice

Assume that Bunch Inc.has an issue of 18-year $1,000 par value bonds that pay 7% interest,annually.Further assume that today's required rate of return on these bonds is 5%.How much would these bonds sell for today? Round off to the nearest $1.

• A) $1,233.79
• B) $1,201.32
• C) $1,134.88
• D) $1,032.56

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Definitions:

Grouping

A method in algebra to simplify expressions or solve equations by combining or partitioning terms.

Perfect Square Trinomial

A perfect square trinomial is a quadratic expression that can be expressed as the square of a binomial, characterized by specific relationships among its coefficients.

Perfect Square Trinomial

A trinomial expression that is the square of a binomial, characterized by having three terms where two are perfect squares and one is double the product of the square roots of those squares.

Zero-Factor Property

A principle stating that if the product of two quantities is zero, then at least one of the quantities must also be zero.