ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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31. An analyst is considering the purchase of a Government of Canada bond that will pay its face value of $10 000 in one year's time, but pay no direct interest. The market interest rate is 4% and the bond is being offered for sale at a price of $9400. The analyst should recommend
purchasing the bond because the purchase price is more than its present value and is therefore profitable.
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not purchasing the bond because the buyer could earn an additional $376 by investing the $9400 elsewhere.
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not purchasing the bond because the purchase price is less than its present value.
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purchasing the bond because the purchase price is less than its present value and is therefore profitable.
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not purchasing the bond because the buyer could earn an additional $224 by investing the $9400 elsewhere.
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