ORT ANSWER/PROBLEM srcach problem show all the appropriate calewlations and proc
ID: 2795346 • Letter: O
Question
ORT ANSWER/PROBLEM srcach problem show all the appropriate calewlations and procedures. ror When you retire you will like to receive $10,000 at the end of each month for How much money do you need to save, by the time you res Assume that you could earn an annual rate o, 8% on your . retire, to achieve that financial goal? invested funds. (5 points) & "lo 38) You ha ve no savings but your financial goal is to invest the same amount each month for the you can earn a return of 6% per year on your next 30 years in order to accumulate $1 million. If invested funds, how much do you have to invest each month as to achieve your goal? (5 points) 39) Bailey's Inc. bonds have a par value of $1,000 and currently sell for $1,160.00 each. These bonds annual coupon rate is 7% paid on semi-annual basis. If these bonds have eight years to maturity, what is the yield to maturity of these bonds? (5 points)Explanation / Answer
Ans. Annual rate of interest is 8%
and monthly rate of interest is 8/12 = .67%
Desired amt $10000
Monthly payment = $10000 = $73.38 per month
(1+.0067)12X30
38. Per month rate = 6/ 12 = .50%
Monthly saving = $1000000/ (1+.0050)12X30 = $5995.51
39. Semi annual interest = (1000X3.50%) = $35
Yield to maturity = 35 + (1160-1000)/16
(1160+1000)/2
= (35+10 )/ 1080 X100 = 4.17%
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