You have just won a very special prize, a "consol" bond that pays $70,000 every six months (semi-annual payment) forever. The only caveat is that the first payments are given 6.5 years from now. You are not that enthusiastic about waiting that long. In fact, you really want to simply receive 19 quarterly payments with the first payment starting one quarter from now. If the APR is 12% compounded monthly, what is the quarterly payment amount you want to receive instead?

You have just won a very special prize, a "consol" bond that pays $70,000 every six months (semi-annual payment) forever. The only caveat is that the first payments are given 6.5 years from now. You are not that enthusiastic about waiting that long. In fact, you really want to simply receive 19 quarterly payments with the first payment starting one quarter from now. If the APR is 12% compounded monthly, what is the quarterly payment amount you want to receive instead?

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

You deposit $1,000 into an account every six months to help with your down payment savings for a home. How much will you have at the end of seven years if the account has a monthly compound annual percentage rate of 14%? (Tip: first figure out the effective semiannual interest rate.)
You have $15,852.43 in a brokerage account, and you plan to deposit an additional $6,000 at the end of every future year until your account totals $240,000. You expect to earn 14% annually on the account. How many years will it take to reach your goal? Round your answer to the nearest whole number. years
You would like to have $53,000 in 13 years. To accumulate this amount, you plan to deposit an equal sum in the bank each year that will earn 6 percent interest compounded annually. Your first payment will be made at the end of the year. a. How much must you deposit annually to accumulate this amount? b. If you decide to make a large lump-sum deposit today instead of the annual deposits, how large should this lump-sum deposit be? (Assume you can earn 6 percent on this deposit.) c. At the end of five years, you will receive $20,000 and deposit this in the bank toward your goal of $53,000 at the end of year 13. In addition to the lump-sum deposit, how much must you deposit in equal annual amounts, beginning in year 1 to reach your goal? (Again, assume you can earn 6 percent on your deposits.)
An investment offers $966 per year for 11 years, with the first payment occurring Zyears from now. If the required return is 9 percent, what is the value of the investment? (HINT: Remember that when you calculate the PV of the annuity, the claculator gives you the present value of the annuity 1 period before the annuity starts. So if the annuity starts in year 7, that calculator will to give you the persent value of annuity in year 6. Now you have to bring this number to period O by inputting: N=6 (1 period before the annuity starts, in your case it would be a different number depending when your annuity starts) R=9 FV=Present value of annuity you found in step 1. And you solve for PV)
C) What is the present value of $7,500 per year, at a discount rate of 8.5 percent, if the first payment is received 10 years from now and the last payment is received 25 years from now?You have signed up for your 401k and will deposit $750 into your 401k when you are paid at the end of each month. If you earn a compound annual rate of return of 6%, how much will you have in 15 years?What would your monthly car payment be if you financed a $35,000 car for 3 years at a rate of 6%?The appropriate discount rate for the following cash flows is 12 percent compounded quarterly. What is the present value of the cash flows? Year 1 CF=700, Year 2 CF=600, Year 3 CF=0, Year 4 CF=1000
You have $30,629.21 in a brokerage account, and you plan to deposit an additional $5,000 at the end of every future year until your account totals $250,000. You expect to earn 11% annually on the account. How many years will it take to reach your goal? Round your answer to the nearest whole number. years
You have your choice of two investment accounts. Investment A is a 14-year annuity that features end-of-month $1,050 payments and has a rate of 6.6 percent compounded monthly. Investment B is a lump-sum investment with an interest rate of 6.1 percent compounded continuously, also good for 14 years. How much money would you need to invest in B today for it to be worth as much as Investment A 14 years from now?
You make $10,000 deposit 1 year from now, $15,000 deposit 3 years from now and $20,000 deposit 5 years from now in real dollars. You plan to retire 30 years from now. What monthly income you will receive due to these deposits, in real dollars, over five years after the retirement? The first payment would be received at the end of the first month after the retirement and the last payment on the month ending the fifth year. The nominal rate is 8.5% and the inflation expectations are 3.2%. Please use excel
You want to receive $5000 per month for 20 years in real dollars in an account when you retire in 35 years. The first monthly payment to be received 1 month after you retire. The nominal return on your investment is 9.94 percent and the inflation rate is 3.2 percent. What is the real amount you must deposit each year for 35 years to achieve your goal? Pls do using Excel
Suppose you are going to invest $11,000 per year for six years. The appropriate interest rate is 9 percent. What is the future value if the payments are made on the last day of the year? What if the payments are made on the first day of the year? a) $82,756.68; $90,204.78 b) $90,204.78; $82,756.68 c) $49,345.10; $53,786.16 d) $53,786.16; $49,345.10

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