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Jerry has an opportunity to buy a bond with a face value of


Jerry has an opportunity to buy a bond with a face value of S10 000 and a coupon rate of 14%, payable semiannually.

(a) If the bond matures in five years and Jerry can buy one now for S3500, what is his IRR for this investment?

(b) If his ALARR for this type of investment is 20%, should he buy the bond?

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Mechanical Engineering: Jerry has an opportunity to buy a bond with a face value of
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