copy3 - Problem 5 - 11. Yield to Call and Realized Rates of...

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Problem 5 - 11. Yield to Call and Realized Rates of Return. Nine years ago, Goodwyn and Wolf incorporated sold a 16 year bond with a 11% annual coupon rate and a 10% call premium. Today, G& W called the bonds. The bonds originally were sold at their face value of $1000. Compute the realize rate of return for investors who purchased the bonds when they were issued and who surrender them today in exchange for the call price. __%. The realized rate of return is the return that would make the present value of interest received and the call amount equal to the initial price paid by the investor. The realized rate of return can be calculated using the RATE function Initial Price $1,000 Call Price $1,100 Years till call 9 years Annual interest 110 Rate of return 11.69% Problem 11-7 NPV Your division is considering two investment projects, each of which requires an up front expenditure of $23 million. You estimate that the investments will produce the following net cash flows: Year Project A Project B
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This note was uploaded on 06/18/2011 for the course BUSN 5000 taught by Professor Online during the Spring '10 term at Webster.

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copy3 - Problem 5 - 11. Yield to Call and Realized Rates of...

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