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NPV (Net Present Value) measures the dollar value a project adds. IRR (Internal Rate of Return) is the discount rate where NPV = 0.
Exam tip: Prof. Liu loves asking “when do NPV and IRR disagree?” - mutually exclusive projects with different scales.
A 10-yr bond ($1,000 face, 6% coupon) with an 8% market rate trades at:
Not quite. When the coupon rate (6%) < market rate (8%), the bond trades at a discount, not at $927.50. The correct price is $865.80.
Which adjusting entry is needed for accrued revenue?
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