nominal payment each year, forever. It is also a good approximation for the present discounted value of a stream of constant pa pose that i= 4%. Let $z = $500. present value of the consol is $ 12500. (Enter your response as a whole number.) the expected present discounted value of each of the following bonds. (Hint: Use the formula from the chapter but remember to a 4%, the expected present discounted value of a bond that pays $500 per year over the next 10 years is $. (Round your respo 4%, the expected present discounted value of a bond that pays $500 per year over the next 20 years is $. (Round your respo 4%, the expected present discounted value of a bond that pays $500 per year over the next 30 years is $. (Round your respo 4%, the expected present discounted value of a bond that pays $500 per year over the next 50 years is $ (Round your respo
nominal payment each year, forever. It is also a good approximation for the present discounted value of a stream of constant pa pose that i= 4%. Let $z = $500. present value of the consol is $ 12500. (Enter your response as a whole number.) the expected present discounted value of each of the following bonds. (Hint: Use the formula from the chapter but remember to a 4%, the expected present discounted value of a bond that pays $500 per year over the next 10 years is $. (Round your respo 4%, the expected present discounted value of a bond that pays $500 per year over the next 20 years is $. (Round your respo 4%, the expected present discounted value of a bond that pays $500 per year over the next 30 years is $. (Round your respo 4%, the expected present discounted value of a bond that pays $500 per year over the next 50 years is $ (Round your respo
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
MN.50.
Transcribed Image Text:The present value of an infinite stream of dollar payments of $z (that starts next year) is $z/i when the nominal interest rate, i, is constant. This formula gives the price of a consol-a bond paying a
fixed nominal payment each year, forever. It is also a good approximation for the present discounted value of a stream of constant payments over long but not infinite periods, as long as i is constant.
Suppose that i = 4%. Let $z= $500.
The present value of the consol is $ 12500. (Enter your response as a whole number.)
Find the expected present discounted value of each of the following bonds. (Hint: Use the formula from the chapter but remember to adjust for the first payment.)
If i = 4%, the expected present discounted value of a bond that pays $500 per year over the next 10 years is $
(Round your response to the nearest whole number.)
If i = 4%, the expected present discounted value of a bond that pays $500 per year over the next 20 years is $
(Round your response to the nearest whole number.)
(Round your response to the nearest whole number.)
If i = 4%, the expected present discounted value of a bond that pays $500 per year over the next 30 years is $
If i = 4%, the expected present discounted value of a bond that pays $500 per year over the next 50 years is $
(Round your response to the nearest whole number.)
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