Question $5$

$($a$)$ The valuation process for a bond requires a knowledge of three basic elements, what

are they?

$($b$)$ Consider a bond, maturing in $10$ years and having a coupon rate of $8$ percent. The par

value is $$1,000.$ Investors consider $10$ percent to be an appropriate required rate of

return in view of the risk level associated with this bond. What is the value of the

bond?

$($c$)$ Define the following and discuss the decision rules for each:

$($i$)$ Independent projects

$($ii$)$ NPV Method

$($iii$)$ PI Method

$($iv$)$ IRR Method

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