Based on the Net Present Value of _____ for This

question 70

Multiple Choice

Based on the net present value of _____ for this project, you should _____ the project.

• A)-$2,021.28; reject
• B)-$406.19; reject
• C)$7,978.72; accept
• D)$9,836.74; accept
• E)$12,684.23; accept

---

Definitions:

Zero-coupon Bond

A bond that does not pay interest during its life and is sold at a discount from the face value, which is paid to the holder at maturity.

Forward Interest Rate

A rate that is deduced from current bond yields, representing the expected future interest rate between two periods.

Bond Stripping

Selling bond cash flows (either coupon or principal payments) as stand-alone zero-coupon securities.

Arbitrage

The method of earning profits by exploiting the price variances of an identical asset across diverse markets through concurrent purchase and sale.