Author Question: DYI Construction Co is considering a new inventory system that will cost 750,000. The system is ... (Read 54 times)

RODY.ELKHALIL · **on:** Jul 10, 2018

DYI Construction Co is considering a new inventory system that will cost 750,000.

The system is
expected to generate positive cash flows over the next four years in the amounts of 350,000 in year
one, 325,000 in year two, 150,000 in year three, and 180,000 in year four. DYI's required rate of
return is 8. What is the payback period of this project
A) 2.50 years B) 4.00 years C) 2.91 years D) 3.09 years

Question 2

A Heights Inc. bonds have a coupon rate of 7, a yield to maturity of 10, a face value of 1,000,
and mature in 10 years. Which of the following statements is MOST correct?

A) An investor who purchases the bond today will earn a return of 10 if he sells the bond after
one year.
B) An investor who purchases the bond today will earn a return of 10 per year if he holds the
bond until it matures.
C) An investor who purchases the bond today will earn a return of 7 if he sells the bond after
one year.
D) An investor who purchases the bond today will earn a return of 17 per year if he holds the
bond until it matures.

Eazy416 · **Reply #1 on:** Jul 10, 2018

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