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?

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A: An annuity refers to a payment series that provides periodic amounts in exchange for a lump-sum…

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Q: Suppose that if you purchase a US Treasury bond, it will pay you a one-time payment of $5000 in 10…

A: A Treasury Bond is a bond issued by the Government of USA. It carries no risk of default and are…

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A: Principal amount invested now will become certain amount after certain period of time at specific…

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: If the interest rate is 15%, what is the present value of a security that pays you $1,100 next year,…

A: Time value of money is one of important concept being used in finance. As per this concept, a sum of…

Q: Assuming interest rates are at 6%, what is the fair value of this offer?

A: Fair value or present value can be calculated using the present value concept.  1. Find the value of…

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: Consider a fixed-payment security that pays P100 at the end of every year fo the three years. If the…

A: Present value of bond can be calculated by using this equation Present value =C1/(1+r) +C2/(1+r)2…

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: A person plans to have a retirement policy which will give him return when he reaches an age of 50.…

A: The term "future value" refers to the projected value of an asset, investment, or amount of money at…

Q: ppose in the question above, the tuition obligations have a Macaulay duration of 4.35 in years, and…

A: Duration of the bond shows the weighted period of the bond required to recover the all cash flow…

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

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Q: You own a hotel that you will receive EURO. 150,000 in rental income for next year. The rent will be…

A: Solution:- When an equal amount is receivable each period with a constant growth rate over a number…

Q: What is the present value of a security that will pay $2,000 at the end of each year for 6 years if…

A: The present value can be calculated as follows if the payments are made at the end : Calculations…

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

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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: In 2020, your firm' s sales were $1,500,000, its net income was $400,000, and the dividend payment…

A: The dividends are the returns provided to the shareholders by the company. The dividend is the…

Q: Eren purchased a bond, costing 890, three years ago, with a current price of 925. This bond paid 100…

A: Price of bond =Present value of  value after 4 years +Present value of coupon payment.

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,…

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A: Arbitrage is the strategy of taking advantage of price differences in different markets for the same…

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: Bill wants to buy a bond. It has a face value of $10,000, a bond rate of 4% (nominal), payable…

A: Solution:- Bond price means the price at which the bond is currently trading in the market. We know…

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…

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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: 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…

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

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

A: Perpetual bonds do not have a principal payback requirement, in contrast to ordinary bonds, which…

Q: Someday you hope to retire and have $200,000 of income a year in today's dollars. You want to fund…

A: To solve this problem, we need to use the concept of future value and present value of an annuity.…

Q: What is the interest rate if Php55, 200 become Php88, 100 after 4 years?

A: The value appreciated with the interest element at a certain rate for a certain period of time is…

Q: You are thinking about buying a savings bond. The bond costs $54 today and will mature in 7 years…

A: Present Value of Bond = pv = $54Time = t = 7 yearsFuture Value of Bond = fv = $108

Q: Suppose that savings and other investments will pay you 4% interest. A bond promises to pay you and…

A: Annual payment = $200 Interest rate = 4%

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.