Assume you have invested $10,000 into a bank at an interest rate of 6% per year. The bank has promised to pay you ŞX every year starting in year one and continuing forever, in addition to $7X every five years starting in year five and continuing forever. Calculate the value of X.

Assume you have invested $10,000 into a bank at an interest rate of 6% per year. The bank has promised to pay you ŞX every year starting in year one and continuing forever, in addition to $7X every five years starting in year five and continuing forever. Calculate the value of X.

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Question

Assume you have invested $10,000 into a
bank at an interest rate of 6% per year. The
bank has promised to pay you $X every year
starting in year one and continuing forever,
in addition to $7X every five years starting in
year five and continuing forever. Calculate
the value of X.
a. $294.4
b. $321.2
c. $612.8
d. $423.1
e. $267.6
f. $348
O O

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