(SOLVED) If $1,000 is invested today and $1,000 is invested at the beginning of each of the next three years at 12% interest
Discipline: Finance
Type of Paper: Question-Answer
Academic Level: Undergrad. (yrs 1-2)
Paper Format: APA
Question
FINANCIAL MATHEMATICS
1.
If $1,000 is invested today and $1,000 is invested at the beginning of each of the next three years at 12% interest (compounded annually), the amount an investor will have at the end of the fourth year will be closest to?
2.
If $10,000 is invested today in an account that earns interest at a rate of j2 is 9%, what is the value of the equal annual withdrawals that can be taken out of the account at the end of each of the next five years if the investor plans to deplete the account at the end of the time period?
3.
5.5% coupon, paid semi-annually will mature on April 15, 2026. If the bond price is 102, what is the current yield?
Expert Solution Preview
| 1) | Future Value | $ 5,353 | | | | | | |
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| Working: | | | | | | | | |
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| # 1 | | | | | | | | |
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| Future Value of 1 : | | | | | | | | |
| 0 | = | 1.12^4 | = | 1.5735 | | | | |
| 1 | = | 1.12^3 | = | 1.4049 | | | | |
| 2 | = | 1.12^2 | = | 1.2544 | | | | |
| 3 | = | 1.12^1 | = | 1.1200 | | | | |
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| # 2:Future Value of Cash Flow: |
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