1. How much should you be willing to pay for a zero-coupon bond that earns 3% per year and pays $1000 in 10 years?
$744.09
$1,343.92
$8,530.20
$751.31
None of these
2. Relay Contractors purchased a sheep foot roller three years ago for $70,000. It was projected to have a useful life of 10 years and a salvage value of $15,000. Due to the intensity of the work, the roller had to be upgraded for 10,000 one year ago. It can be sold today for $42,000 but will need a $ 15,000 upgrade to last 7 more years. What is your value of P (the first cost in your analysis) if the company decides to keep the roller for 7 more years?
$70,000
$72,000
$57,000
$42,000