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You have decided to buy a perpetual bond. The bond makes one payment at the end of every year forever and has an interest rate of 8%. If the bond initially costs 4000$, what is the payment every year?
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- You want to invest $8,000 at an annual Interest rate of 8% that compounds annually for 12 years. Which table will help you determine the value of your account at the end of 12 years? A. future value of one dollar ($1) B. present value of one dollar ($1) C. future value of an ordinary annuity D. present value of an ordinary annuityDefine the stated (quoted) or nominal rate INOM as well as the periodic rate IPER. Will the future value be larger or smaller if we compound an initial amount more often than annually—for example, every 6 months, or semiannually—holding the stated interest rate constant? Why? What is the future value of $100 after 5 years under 12% annual compounding? Semiannual compounding? Quarterly compounding? Monthly compounding? Daily compounding? What is the effective annual rate (EAR or EFF%)? What is the EFF% for a nominal rate of 12%, compounded semiannually? Compounded quarterly? Compounded monthly? Compounded daily?Use the tables in Appendix B to answer the following questions. A. If you would like to accumulate $4,200 over the next 6 years when the interest rate is 8%, how much do you need to deposit in the account? B. If you place $8,700 in a savings account, how much will you have at the end of 12 years with an interest rate of 8%? C. You invest $2,000 per year, at the end of the year, for 20 years at 10% interest. How much will you have at the end of 20 years? D. You win the lottery and can either receive $500,000 as a lump sum or $60,000 per year for 20 years. Assuming you can earn 3% interest, which do you recommend and why?
- Use the tables in Appendix B to answer the following questions. A. If you would like to accumulate $2,500 over the next 4 years when the interest rate is 15%, how much do you need to deposit in the account? B. If you place $6,200 in a savings account, how much will you have at the end of 7 years with a 12% interest rate? C. You invest $8,000 per year for 10 years at 12% interest, how much will you have at the end of 10 years? D. You win the lottery and can either receive $750,000 as a lump sum or $50,000 per year for 20 years. Assuming you can earn 8% interest, which do you recommend and why?You put $250 in the bank for S years at 12%. A. If interest is added at the end of the year, how much will you have in the bank after one year? Calculate the amount you will have in the bank at the end of year two and continue to calculate all the way to the end of the fifth year. B. Use the future value of $1 table in Appendix B and verity that your answer is correct.You have decided to buy a perpetual bond. The bond makes one payment at the end of every year forever and has an interest rate of 7%. If the bond initially costs $5000, what is the payment every year?
- You wish to purchase a $1,000 bond from a friend who needs the money. There are 7 years remaining until the bond matures, and interest payments are quarterly. You decide to offer $750.08 for the bond because you want to earn exactly 16% per year compounded quarterly on the investment. What is the annual bond rate of interest?If you are considering the purchase of a bond that pays $850 per year forever, and the rate of interest you want to earn is 11% per year, how much money should you pay for the bond?You are thinking about buying a savings bond. The bond costs $50 today and will mature in 9 years with a value of $100. What annual interest rate will the bond earn? The bond will earn an annual rate of _____%. (Round to two decimal places.)
- A man was offered a bond with a face value of ₱1,000,000 which has interest of 8% per year payable semi –annually and due in 10 years. If he wants to earn 6% semi –annually, how much must he pay the bond? Solve and show the solution.Suppose you purchase a $5,000 bond that pays 7% interest annually and matures in five years. If the inflation rate during the next five years is 4%, the estimated real rate of return isYou are planning to save for retirement over the next 20 years. To do this, you will invest $700 a month in a stock account and $400 a month in a bond account. The return of the stock account is expected to be 9 percent, and the bond account will pay 6 percent. When you retire, you will combine your money into an account with a return of 8 percent. How much can you withdraw each month from your account assuming a 15-year withdrawal period? A. $623407 B. $630939 C. $635876 D. $7480888 E. $2259917
