You Have Just Won a $50,000 Bond That Pays No

question 20

Multiple Choice

You have just won a $50,000 bond that pays no interest and matures in 20 years. If the discount rate is 10%, what is the present value of your bond?

• A) $7,450
• B) $8,175
• C) $8,900
• D) $1,490

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Definitions:

Replacement Projects

Investments made to replace outdated or aged assets to maintain or improve the efficiency of operations.

Expansion Projects

Initiatives undertaken by a company to increase its capacity, sales, or market reach, typically requiring significant investment.

Accounting Beta Model

A method used in finance to estimate the beta of a company's stock based on its accounting ratios, as opposed to market-based measures.

Return on Equity

A measure of a corporation's profitability, calculated by dividing net income by shareholder equity, indicating how effectively company management is using investments to generate earnings growth.