1. Assex Biochemical Co. has a $1,000 par value bond outstanding that pays 13 percent annual interest. The current yield to maturity on such bonds in the market is 17 percent. Use Appendix B and Appendix D for an approximate answer but calculate your final answer using the formula and financial calculator methods. Compute the price of the bonds for the maturity dates:
Bond Price a. 30 years ? b. 16 years ? c. 7 years ?
2. Should the anticipated internal rate of return (IRR) for a proposed foreign project be compared to (a) alternative home country proposals, (b) returns earned by local companies in the same industry and/or risk class, or (c) both? Please justify your answer.