=> It is given that the amount paid is $10,000 and invested for 6 years, annual interest rate is given as 5% and compounded yearly.
=> Since you have not received any interest along the way We can find amount received in 6 years by using the compound interest formula:
, where A is the final amount received, P is the initial amount paid, r is the annual interest rate, n is the number of times compounded in a time period and t is the time period
=> Just plug the values into the formula to find the answer
=> Therefore the answer is $13,401
30. You have purchased a guaranteed investment contract() from an insurance firm that promises to pay...
You have purchased a guaranteed investment contract (GIC) from an insurance firm that promises to pay you a 7% compound rate of return per year for 5 years. If you pay $15,000 for the GIC today and receive no interest along the way, you will get __________ in 5 years (to the nearest dollar).
You have purchased a guaranteed investment contract (GIC) from an insurance firm that promises to pay you a 7% compound rate of return per year for 7 years. If you pay $15,000 for the GIC today and receive no interest along the way, you will get __________ in 7 years (to the nearest dollar). $22,350 $24,500 $24,087 $22,511
1) 2) A bond with a 7-year duration is worth $1,076, and its yield to maturity is 7.6%. If the yield to maturity falls to 7.48%, you would predict that the new value of the bond will be approximately You have purchased a guaranteed investment contract (GIC) from an insurance firm that promises to pay you a 7% compound rate of return per year for 6 years. If you pay $15,000 for the GIC today and receive no interest along...
- Example: An insurance company issues a guaranteed investment contract (GIC) for $10,000. If the GIC has a five-year maturity and a guaranteed interest rate of 8%, i t promises to pay $10,000 x 1.085= $14,693.28 • The company can choose to fund its obligation with $10,000 of 8% annual coupon bonds, selling at par value, with six years to maturity. As long as the market interest rate stays at 8%, the company has fully funded the obligation. Why? •...
Immunization . Example: An insurance company issues a guaranteed investment contract (GIC) for $10,000. If the GIC has a five-year maturity and a guaranteed interest rate of 8%, i t promises to pay $10,000 x 1.085= $14,693.28 . The company can choose to fund its obligation with $10,000 of 8% annual coupon bonds, selling at par value, with six years to maturity. As long as the market interest rate stays at 8 %, the company has fully funded the obligation....
If you had an investment opportunity that promises to pay you $29,000 in four years and you could earn a 8% annual return investing your money elsewhere What is the most you should be willing to invest today in this opportunity? (FV of $1, PV of $1, FVA of $1, and PVA of $1). (Use appropriate factor(s) from the tables provided. Round final answer to the nearest whole dollar.)
An investment promises to pay you cash flows of $12,000 at the end of each year for the next 11 years. If you were to pay $75,000 today for this investment, what would your annual rate of return be? (Calculate your answer as a percentage. Type 86 for 86%).
How much would you be willing to pay today for an annuity that promises to pay $3,882 per year for 12 years, beginning exactly one year from today. Your relevant interest rate is 6 percent. DO NOT USE DOLLAR SIGNS OR COMMAS IN YOUR ANSWER. ROUND ANSWER TO THE NEAREST DOLLAR
Suppose you purchased long-term bonds issued by ABC Corporation. The firm promises to pay an 8% annual coupon until maturity and to pay the par value at maturity, which is 10 years from today. The coupon payment per annum will be $ ____ and it is considered the annuity component of a bond and the maturity value of $ ______ is considered the lump sum component of a bond.
You own an investment that promises to pay $100,000 thirty years from today. a. What is the present value of this security at a discount rate of 6%? 8%? 10%? b. What is meant by the phrase discounting? What is a discount rate? c. What is the relationship between present values and interest rates?