Present Value of a $: How much should you be willing to pay for a...
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Present Value of a $: How much should you be willing to pay for a bond that promises to pay you $5,000 in 10 years? Assume that the stated rate of interest on the bond is 8% per year and interest is compounded on an annual basis. a. How much should you be willing to pay for a bond that promises to pay you $5,000 in 10 years? Assume that the stated rate of interest on the bond is 8% b. per year and interest is compounded on a quarterly basis. Future Value of an Annuity a. What is the future value of an investment that requires three annual payments of $1,200 each (payments are made at the end of each period). The rate of interest on the annuity s 6%. what is the fat revalue ofan investment that requires 36 monthly payments of$100 cach? The rate of interest on the annuity is 6% per year. . What is the future value of the investment in part a, if the annuity is due (payments are made at the beginning of each period) rather than ordinary? c
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