o Alaska at an estimated cost of $3,000 If you can earn an in order to have the

Question

o Alaska at an estimated cost of $3,000 If you can earn an in order to have the funds needed for the planned take a family v acationto average of 4% per year, how much must you investtoday vacation? A) $3,000 C) $3,120 D) $2,880 14) For a 20-year $1,000 par value 5% annual cout on bond that is selling at a discount and makes semanan al Usoupon payments, which of the following is TRUE? A) The YT. of this bond is below 5%. B) Because this bond is selling at a discourt it would be worth less than $1,000 at maturity. C) The bond pays $25 in interest every six months. ) The price of this bond is above its par value. 15) If you wish to withdraw S200 at the end of each of the next 8 years earning 35% per year, what one-th eed to make today in order to be able to make your planned withdrawals? C) $1,600 D) $1544 A) $1,3 B) $1,810 Bxcel is TRUB teage loan can be found by

Explanation / Answer

1) Future Value $3,000.00 Rate 4.00% Period 3 Present Value = $3000/(1.04)^3 $2,666.99 2) Face Value $1,000.00 Bond will redeem at $1000 at maturity (d) Coupon Rate = 5%/2 2.50% PMT $25.00 YTM =6%/2 3.00% YTM should be greater than 5 because bonds are selling at discount (a) Period = 20 x 2 40 Present Value = PV(3%,40,-25,-1000) $884.43 The price of bond is below par(d) Option C is correct its paying $25 every six months. 3) PMT $200.00 Rate 3.50% Period 8 Present Value = PV(3.50%,8,-200) $1,375

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