An investment in consol bonds promises to provide an interest payment of $2.5 million a year in perpetuity. If the interest rate is 3.3%, what is the value of this investment?
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- Which of the following investments that pay will $18,500 in 8 years will have a higher price today? The security that earns an interest rate of 8.50%. The security that earns an interest rate of 12.75%.Your liabilities consist of a payment of $5 million coming due in two years and a payment of $4 million coming due in three years. The market interest rate is 2%. What are the duration and convexity of your liabilities? O 2.71 and 7.64 O 2.80 and 9.17 O 2.21 and 5.39 O 2.44 and 6.20Solve with explanation and financial accounting question
- Assume annual mortgage payments of $12,000 for 30 years and an interest rate of 6.168% per year. What initial principal or PW will this repay?The amount of money originally put into an investment is known as the present value P of the investment. For example, if you buy a $50 U.S. Savings Bond that matures in 10 years, the present value of the investment is the amount of money you have to pay for the bond today. The value of the investment at some future time is known as the future value F. Thus, if you buy the savings bond mentioned above, its future value is $50. If the investment pays an interest rate of r (as a decimal) compounded yearly, and if we know the future value F for t years in the future, then the present value P = P(F, r, t), the amount we have to pay today, can be calculated using the formula below. P = F × 1 (1 + r)t We measure F and P in dollars. The term 1/(1 + r)t is known as the present value factor, or the discount rate, so the formula above can also be written as the following. P = F × discount rate (a) Explain what information the function P(F, r, t) gives you. The function…What is the effective annual rate for this investment on these financial accounting question?
- ou can assume that all payments are made at the beginning of the period and use "1" for the "type" argument in the formula. A. Suppose you invest $ 11,400 today. What is the future value of the investment in 29 years, if interest at 7% is compounded annually? B B. Suppose you invest $ 11,400 today. What is the future value of the investment in 29 years, if interest at 7% is compounded quarterly? 4 5 6 27 28 29 C. Suppose you invest St $ 570 monthly. What is the future value of the investment in 29 years, if interest at 5% is compounded monthly? Question 1 Question 2 + Ready Accessibility: Investigate MAR 17 A W +You buy a bond that pays annual interest payments of 7% of the bond’s face value of $1000. You initially pay $950 for the bond. You receive an annual interest payment after one year, then sell the bond for $880. What is your total rate of return on the investment, expressed as a percentage of the purchase price?Suppose that the constant and perpetual cash flow is $1,000 and the discount rate is 10%. What is the value of this perpetuity? 5-year bond with a coupon rate of 4% has a face value of $1000. What is the annual interest payment?
