Posts: 6
Threads: 4
Likes Received: 0 in 0 posts
Likes Given: 0
Joined: Nov 2014
From the DSST Official Test Preparation Guide: "A company needs $1,000,000 to expand its warehouse and has decided to issue bonds with a 10-year maturity and an 8% yield. What would the present value of this bond be?
The correct answer is 463,199. The answer explanation says to use the NPV equation. However, I am not getting the right answer. Any help that can be provided is greatly appreciated. Thanks!
![[-]](https://www.degreeforum.net/mybb/images/collapse.png)
•
Posts: 426
Threads: 4
Likes Received: 6 in 4 posts
Likes Given: 7
Joined: Jun 2012
Bond yield is the IRR of the bond's cash flows, including coupon payments, purchase price and principal. Since this is a zero coupon bond, it's simply a case of discounting $1,000,000 back 10 years at 8%, which gives you $463,193. I'm not sure why the "answer" is slightly different, but it's likely due to some rounding differences somewhere.
CPA (WA), CFA Level III Candidate
Currently pursuing: ALM, Data Science - Harvard University, Cambridge, MA (12/48, on hold for CFA/life commitments)
MBA, Finance/Accounting - Indiana University, Bloomington, IN, 2015
BSBA, General Management - Thomas Edison State College, Trenton, NJ, 2012
•
Posts: 259
Threads: 13
Likes Received: 2 in 2 posts
Likes Given: 0
Joined: Oct 2014
Thought they got rid of this test, Last test date was 31 Dec 14.
CCAF Air & Space Operations Technology- COMPLETE
TESC AS - General Managment-COMPLETE
TESC BSBA Computer Information Systems-COMPLETE
WGU MBA IT -COMPLETE
•
Posts: 426
Threads: 4
Likes Received: 6 in 4 posts
Likes Given: 7
Joined: Jun 2012
I thought they only got rid of Accounting and suspended Money and Banking.
CPA (WA), CFA Level III Candidate
Currently pursuing: ALM, Data Science - Harvard University, Cambridge, MA (12/48, on hold for CFA/life commitments)
MBA, Finance/Accounting - Indiana University, Bloomington, IN, 2015
BSBA, General Management - Thomas Edison State College, Trenton, NJ, 2012
•
