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Assume that you won a hundred $1,000 par value bonds, with a total face value...

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Accounting

Assume that you won a hundred $1,000 par value bonds, with a total face value of $100,000. These bonds have a 4% coupon, pay interest semiannually, and have 5 years remaining until they mature. New bonds with the same risk and maturity provide yields to maturity of 14%. You are considering selling your bonds and depositing the proceeds in a savings account which pays interest at a rate of 6%, annual compounding. If you do make the transaction, you will liquidate the savings account by making 5 equal withdrawals, the first coming one year from now. What will be the amount of each annual withdrawal?

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