A man bought a government bond which cost P1000 and will pay P50 interest each year for 20 years. The bond will mature at the end of 20 years and he will receive the original P1000. If there is a 2% annual inflation during this period, what rate of return will the investor receive after considering the effect of inflation?

Q: An investor purchasing a British consol is entitled to receive annual payments from the British…

A: Present value is the estimation of the current value of future cash value which is likely to be…

Q: Suppose the government decides to issue a new savings bond that is guaranteed to double in value if…

A: Step1: Calculating the value of rate of return on the investment in the bond. We have,The…

Q: What is the present value of a security that promises to pay you $15,000 in 10 years?  Assume that…

A: The objective of this question is to calculate the present value of a future cash flow. In this…

Q: You are thinking about buying a savings bond. The bond costs $48 The bond will earn an annual rate…

A: Present Value = pv = $ 48Time = t = 12 YearsFuture Value = fv = $ 98

Q: what is the payment every​ year

A: To calculate the payment at the end of each we will use below formulaAnnual payment = PV*rWherePV -…

Q: You have decided to buy a perpetual bond. The bond makes one payment at the end of every year…

A: Interest Rate = r = 5%Initial Cost of Bond = ic = $3000

Q: A simple "EE US Treasury Savings Bond" pays the holder $1000 in 30 years. Given that the applicable…

A: To calculate  the bond cost we will use the below formula   Bond cost today = FV/[1+(r/m)]n*m Where…

Q: You purchased a bond at a price of $800. In 15 years when the bond matures, the bond will be worth…

A: A bond reveals the debt instrument that allows the issuer to raise funds from the public. The holder…

Q: Over the next three years, the expected path of 1-year interest rates is 1, 2,and 1 percent, and the…

A: Expected Path of the interest rate is 1, 2, 1 percent. Premia is 0, 0.2 and 0.5 for 1-year, 2-years…

Q: You have an opportunity to purchase a bond that will pay out $815 in 10 months. If you would like…

A: Payout in 10 months = $ 815 Interest rate = 2.2% Period = 10 months

Q: You are considering investing in a savings bond that will pay $50,000 in 6 years. If the competitive…

A: A Bond refers to a concept that is defined as an instrument that represents the loan being made by…

Q: The annual payment of a 10-year fixed-income security is $50. The payments are made at the end of…

A: Present value of annuity is computed as follows:-PV= A*wherePV= Present value of annuityA= periodic…

Q: You would like to save up $13907 to travel in 9 years.  To do so, you will buy a savings bond that…

A: Bonds are an important financial instrument for both investors and issuers, providing a way to raise…

Q: My pension plan will pay me $11,500 once a year for a 10-year period. The first payment will come in…

A: Here,Annual amount received from pension plan is $11,500time period is 10 yearfirst payment starts…

Q: You purchased a bond and will receive $500 every six months for the next five years. If the market…

A: Present value of annuity can be computed by using the following formula: Here,…

Q: You are considering a savings bond that will pay $100 in 8 years. If the interest rate is 2.2%, what…

A: The objective of this question is to find out the present value of a savings bond that will pay $100…

Q: Suppose the government decides to issue a new savings bond that is guaranteed to double in value if…

A: Present value of annuity is the current value of the future payments that are calculated using the…

Q: The bond will earn an annual rate of %. (Round to two decimal places.)

A: An investment that simulates a debt commitment is called a bond. A government, municipality,…

Q: My pension plan will pay me $11,500 once a year for a 10-year period. The first payment will come in…

A: Here,AnnualAmount received from pension plan is $11,500Time Period is 10 yearFirst payment starts…

Q: suppose lender larry values $1 today equal to $2 a month from now, and borrower barry vlaues $1…

A: The Fisher Equation, named after economist Irving Fisher, states the relationship between nominal…

Q: You are planning to save for retirement over the next 35 years. To do this, you will invest $747 per…

A: An annuity refers to a set of periodic payments that are made in exchange for a lump sum payment. It…

Q: Suppose that you want to take out a loan and that your local bank wants to charge you an annual real…

A: Compute the nominal interest rate: Nominal interest rate is calculated by using following formula:

Q: You have decided to buy a perpetual bond. The bond makes one payment at the end of every year…

A: To calculate the payment at the end of each we will use below formula   Annual payment = PV*r Where…

Q: Suppose the U.S. Treasury offers to sell you a bond for $2,000. No payments will be made until the…

A: Bond is type of debt security which carries fixed return as interest. It can be redeem after the…

Q: A US savings bond will pay you $1,000 in 3 years. If return is 2.85%, how much shoudl you pay for…

A: The payment made for bond at current year will be such as investor will realize 2.85% in each of…

Q: You will receive $100 from a savings bond in 4 years. The nominal interest rate is 7.90%. a) What is…

A: BondA bond is a financial instrument which represents a promise, in which the borrower pledges to…

Capital Gain

Any capital asset when sold can give the seller a higher or lower price from its purchase price leading to a capital gain or capital loss. The time period of holding an asset is decided based on if it is a long term or short-term capital gain. On that basis, the rate of taxation is decided if it is 20%, 15% or according to the tax brackets. The rate of taxation differs in the case of equity or debt, whether long or short term. The capital gain can be adjusted from capital loss to arrive at a net capital gain. The amount of gains and the exemption has to be reported in the tax return filed in the financial year in which the asset was transferred. The tax return can be filed quarterly, monthly, semi-annually or annually.