QUIZ 5

# QUIZ 5 - Question 1 0 out of 2 points The alternatives...

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Question 1 0 out of 2 points The alternatives shown below are to be compared on the basis of their capitalized costs. At an interest rate of 10% per year, compounded continuously, the equation that represents the capitalized cost of alternative A is Answer Selected Answer: PW A = [– 50,000( A/P , 10%, 3) – 10,000 + 13,000( A/F , 10%, 3)]/0.10 Correct Answer: PW A = [– 50,000( A/P , 10.52%, 3) – 10,000 + 13,000( A/F , 10.52%, 3)]/0.1052 Response Feedback: incorrect

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Question 2 2 out of 2 points The cost of maintaining a public monument in Washington, D.C., occurs as periodic outlays of \$10,000 every 5 years. If the first outlay is now, the capitalized cost of the maintenance at an interest rate of 10% per year is closest to Answer Selected Answer: \$–26,380 Correct Answer: \$–26,380 Response Feedback: CC = – 10,000(A/P,10%,5)/0 .10 = –10,000(0.26380)/ 0.10 = \$–26,380 Question 3 2 out of 2 points This question is based on the following estimates. The cost of money is 10% per year.
The capitalized cost of machine X is closest to Answer Selected Answer: \$-238,580 Correct Answer: \$-238,580 Response Feedback: CC X = [–66,000(A/ P,10%,6) – 10,000 + 10,000(A/F,10%,6)] /0.10 = [– 66,000(0.22961) – 10,000 + 10,000(0.12961)]/0 .10 = \$–238,582 Question 4 0 out of 2 points

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Question What is the bond interest rate on a 853-dollar bond (i.e., the face value of the bond is 853 dollars) that has semiannual interest payments of 58 dollars and a 23-year maturity date?(Accuracy is at the third decimal.) Answer Selected Answer: 2151.04 Correct Answer: 0.14 ± 0.02 Response Feedback: b=2I/V Question 5 0 out of 2 points
What is the face value of a municipal bond that has a bond (or coupon) interest rate of 9% per year and makes interest payments of 825 dollars every 1 months? Answer Selected Answer: [None Given] Correct Answer: 110,000.0 ± 3

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Response Feedback: If interest is received every m months, then there are c=12/ m interest payments within one year and therefore, I = bV/c => V = cI/b= 12I/(mb) Question 6 0 out of 2 points A municipal bond that was issued 4 years ago has a face value of \$840 and a bond interest rate of 13% per year payable quarterly. The bond has a maturity date of 20 years
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