Required informationAn investment broker that Ava trusts recommended that she purchase a $50,000, 15-year municipal bond that generatesa dividend of 4.5% per year payable quarterly. She will pay a discounted amount of $45,000 now for the bond. In general,Ava hopes to make 6.5% per year compounded quarterly on her investments.Using the PW value, determine if this is a financially advantageous investment for her. Solve with factors.The present worth is $This is nota financially sound investment.

A bond is a legal document that the business must repay the investor for the loan it received from…

Answered: Required information An investment…

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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Similar questions

Megan Brink is offered the possibility of investing $13,119 today at 9% Interest per year in a desire to accumulate $22,000. How many years must Brink wait to accumulate $22,000? (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided. Round your "PV of a single amount" to 4 decimal places and final answer to the nearest whole number.) Present Value Future Value p (PV of a Single Amount) Years years
Solve by using the sinking fund or amortization formula. Betty Price purchased a new home for $245,000 with a 10% down payment and the remainder amortized over a 15 year period at 9% interest. (a) What amount (in $) did Betty finance? $ (b) What equal monthly payments (in $) are required to amortize this loan over 15 years? (Round your answer to the nearest cent.) $ (c) What equal monthly payments (in $) are required if Betty decides to take a 20 year loan rather than a 15 year loan? (Round your answer to the nearest cent.) $
Essay Questions You have just received an inheritance from your aunt of $25,000 in a brokerage account. According to your aunt's will, the monies cannot be withdrawn or put into a savings account (including a CD). The funds must be invested in three different types of financial investments. Select one of the four portfolios below and identify the percentage you would invest in each. Describe the strategy you used to allocate the percentages for each. Research specific investments based on the portfolio you selected. Identify each investment you selected and explain why you made those selections. (Note – there should be at least three symbols in your essay that identify your investments). Option 1 Option 2 Option 3 Option 4 Stock Mutual Fund Bond REIT Bond EFT Mutual Fund ETF Mutual Fund Stock ETF Mutual Fund
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Sarah Wiggum would like to make a single investment and have $1.2 million at the time of her retirement in 30 years. She has found a mutual fund that will earn 4 percent annually. How much will Sarah have to invest today? If Sarah invests that amount and could earn a 14 percent annual return, how soon could she retire, assuming she is still going to retire when she has $1.2 million? Click on the table icon to view the PVIF table To have $1.2 million at retirement, the amount Sarah must invest today is $ (Round to the nearest cent.)
Megan Brink is offered the possibility of investing $8,205 today at 9% Interest per year in a desire to accumulate $15,000. How many years must Brink wait to accumulate $15,000? (PV of $1. EV of $1. PVA of $1. and EVA of $1) (Use appropriate factor(s) from the tables provided. Round your "PV of a single amount" to 4 decimal places and final answer to the nearest whole number.) Present Value 150,000 Answer is complete but not entirely correct. P (PV of a Single Amount) Future Value 0.6421 Years 2 years
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Using the time value of money Your grandfather would like to share some of his fortune with you. He offers to give you money under one of the following scenarios (you get to choose): |1. $8,750 per year at the end of each of the next seven years 2. $50,050 (lump sum) now 3. $100,250 (lump sum) seven years from now Requirement 1. Calculate the present value of each scenario using a 6% discount rate. Which scenario yields the highest present value? Round to nearest whole dollar. 2. Would your preference change if you used a 12% discount rate?
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