unt and use the funds to buy an investment grade bond which makes $50,000 annual coupon payments base

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Part A: 

 

By the end of this year, you will be 35-years old, and you want to plan for your retirement. You wish to retire at the age of 65, and you expect to live 20 years after retirement. Upon retirement you wish to have an annual sum of $50,000 to supplement your social security benefits. Therefore, you opened your retirement account with a 7% annual interest rate. At retirement you liquidate your account and use the funds to buy an investment grade bond which makes $50,000 annual coupon payments based on a 6 % coupon rate throughout your retirement years. 

 

  1. What is the face value, not the actual value, of the bond that you will be investing in?
  2. Please calculate the monthly payment in your retirement account in order to be able to achieve the plan mentioned above. 
  3. How much will your inheritors receive? 
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