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QUESTION 1 You plan to retire at age 40 after a short but highly successful career. You would like to accumulate enough moneyQUESTION 7 You have won the grand prize in a contest! The prize is $25,000 per year paid each year for 10 years. How much wouQUESTION 10 A corporation issued a $200,000, 10% coupon, 10 year bond when the yield was 8%. Assume that the selling price is


filled a few answers in not sure how to get the ones I didnt if someone is able to show me steps for the ones not answered or wrong please
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Answer #1

Solution to the QUESTION-1

The Present Value of an Ordinary annuity

Annual Payment (P) = $150,000

Annual interest rate (r) = 7.00% per year

Number of years (n) = 40 Years

Therefore, the Present Value of an Ordinary annuity = P x [{1 - (1 / (1 + r) n} / r]

= $150,000 x [{1 - (1 / (1 + 0.07)40} / 0.07]

= $150,000 x [{1 - (1 / 14.97445784} / 0.07]

= $150,000 x [{1 - 0.066780381} / 0.07]

= $150,000 x [0.933219619 / 0.07]

= $150,000 x 13.33170884

= $1,999,755

PLEASE BE NOTED (More than 1 Question)

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