Question

Homework: Chapter 6 - Interest Rates & Bond Valuation (HW) Score: 0 of 1 pt 4 4 of 83 complete ► P6-14 (similar to) HW Score: 35.71%, 2.86 of 8 pt Question Help O Aast valuation and rak Personal Finance Problem the o p ted to provide reach of the year and 17300 in 5 years. Her research indicates that she must so Dan what is the most Suppose is betw should pay for the the other een to be the wo the m o u nd od On the basis of your finding in t d your findings in part his the most the should why r (1) The most pay for the s o und the

Answer 1

1.
=3500/4%*(1-1/1.04^4)+17300/1.04^5=26923.9722318358

2.
=3500/9%*(1-1/1.09^4)+17300/1.09^5=22582.8325526482

3.
=3500/14%*(1-1/1.14^4)+17300/1.14^5=19183.0709591701

4.
19183.0709591701 because it is better to be conservative and one should pay considering maximum risk

5.
Increasing risk increases required return and hence decreases the value