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Should Tangshan Mining company accept a new project if its maximum payback is 3.5 years and its initial after tax cost is $5,000,000 and it is expected to provide after-tax operating cash inflows of $1,800,000 in year 1, $1,900,000 in year 2, $700,000 in year 3 and $1,800,000 in year 4?
Zero-Coupon Bond
A bond that does not pay periodic interest and is sold at a discount from its face value, with the return being the difference between the purchase price and the bond's face value at maturity.
Duration
A measure of the sensitivity of the price of a bond or other debt instrument to a change in interest rates, often indicating the bond's price volatility.
Coupon
The interest rate stated on a bond when issued, which is typically paid at regular intervals until maturity.
Target Date Immunization
A strategy used in fixed-income portfolio management where the portfolio is structured to become immune to interest rate changes as it reaches a specified date.
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