How much would you be prepared to pay for a $1,000 bond which comes due in 8 years and pays $100 interest annually assuming your required rate of return is 12% (pick closest answer)? a. $901 b. $1,032 c. $1,007 d. $962
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How much would you be prepared to pay for a $1,000 bond which comes due in 8 years and pays $100 interest annually assuming your required
a. $901
b. $1,032
c. $1,007
d. $962
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- $52,000 is invested in a 5-year fixed interest bond paying 5.5% per year. If interest is reinvested in the account, how much will the bond be worth in 5 years? Round your answer to the nearest dollar.How much would you pay for a $30,000, 4 year, 5% bond if I want a return of 7% { assume bond pays intrest every 6 monthsAssume a $1000 bond issue at the rate of 10% for 15 years. a)What is the interest payment for this bond annually b)What is the interest payment on semi-annually c)How much should the investors pay for this bond i.e. the value
- 2 Refer back to the Series EE savings bonds we discussed at the very beginning of the chapter. a. Assuming you purchased a $50 face value bond, what is the exact rate of return you would earn if you held the bond for 20 years until it doubled in value? b. If you purchased a $50 face value bond in 2019 at the then current interest rate of .10 percent per year, how much would the bond be worth in 2029? c. In 2029, instead of cashing the bond in for its then current value, you decide to hold the bond until it doubles in face value in 2039. What rate of return will you earn over the last 10 years? Input area: a. Original value Number of years Future value b. Interest rate Number of years c. Number of years Output area: $50 a. Rate of return b. Future value C. Rate of return 20 (Use cells A6 to C11 from the given information to complete this question. Your answer for part b should be a positive value.) $100 0.10% 10You intend to purchase a 10-year, $1,000 face value bond that pays interest of $60 every 6 months. If your nominal annual required rate of return is 10 percent with semiannual compounding, how much should you be willing to pay for this bond? a. $ 957.50 b. $826.31 c. $1,086.15 d. $1,032.20 e. $1,124.62You have $1,000 to invest for two years and have two choices: Alternative 1: 2-year zero coupon bond selling at a price of 92. Altemative 2: A bank deposit which pays according to the following rates: 1 year spot rate 3 year spot rate 1 year forward rate two years from now 3.0% 4.5% 4.0% Analyse the altematives to detemine the amount received from each alternative at the end of two years. (Give answer to nearest dollar)
- If the interest rate is 6.0%, what is the present value of a perpetuity paying $265 per year? (A perpetuity is a bond that makes payments forever.) Round to the nearest cent. Do not use dollar signs or commas in your answer. Example: if the answer is $1,234.563, then write "1234.56" .Identify whether the statement are True or False. 1. Insurance companies use replacement value as a basis to determine the appropriate insurance premium to be charged to their clients. * 2. To get book value per share, total liabilities are deducted from total assets, and the resulting figure is divided by total authorized shares * 3. For real properties, it is more important to look at the age of the asset than its size. * 4. Fair Market value is the term used to describe the value derived from the amounts reflected in the financial statements. * 5. Risk identification is important to allow investors to assess the impact of the risk on their investment. * 6. Brownfield investments are easier to evaluate as information is already available from prior years * 7. The book value method is a transparent approach since value can be easily verified by looking at the financial statements * 8. If there are no comparable assets found in the market, it is more appropriate to use the replacement…Use the following tables to calculate the present value of a $375,000 @ 5%, 5-year bond that pays $18,750 interest annually, if the market rate of interest is 10%. Round to the nearest dollar. Present Value of $1 ¦ Present Value of Annuity of $1 Periods 5 % 6 % 7 % 10 % ¦ Periods 5 % 6 % 7 % 10 % 1 .95238 .94340 .93458 .90909 ¦ 1 .95238 .94340 .93458 .90909 2 .90703 .89000 .87344 .82645 ¦ 2 1.85941 1.83339 1.80802 1.73554 3 .86384 .83962 .81630 .75131 ¦ 3 2.72325 2.67301 2.62432 2.48685 4 .82270 .79209 .76290 .68301 ¦ 4 3.54595 3.46511 3.38721 3.16987 5 .78353 .74726 .71299 .62092 ¦ 5 4.32948 4.21236 4.10020 3.79079 6 .74622 .70496 .66634 .56447 ¦ 6 5.07569 4.91732 4.76654 4.35526 7 .71068 .66506 .62275 .51316 ¦ 7 5.78637 5.58238 5.38929 4.86842 8 .67684 .62741 .58201 .46651 ¦ 8 6.46321…
- SvitaSuppose that savings and other investments will pay you 4% interest. A bond promises to pay you and your descendants $200 every year forever, starting next year. What is the most you would be willing to pay for this bond now?You plan to invest in bonds that pay 6.0%, compounded annually. If you invest $10,000 today, how many years will it take for your investment to grow to $15,000? a. 13.92 years b. 13.72 years c. 6.55 years d. 16.67 years e. 6.96 years
