How much is a bond worth if you pay $55 per year in interest forever in...
Amara purchased a bond that will pay $50 a year forever, starting one year from now, if the interest rate r is positive and constant, how much is her bond worth today? 1. 50/r 2. 50/ (1+r) 3. 50 (1+r) 4. 50/(1+r+r2+m+)
How much should you pay for a 6 year 6% pay bond when interest rates are 8% (the face value of the bond is $10,000)? What is the present value of a $1 billion bond paying 8%, expiring in 5 years when market interest rates are 6%?
British government 4.8% perpetuities pay £4.8 interest at the end of each year forever. Another bond, 3.3% perpetuities, pays £3.30 a year forever. a. What is the value of 4.8% perpetuities if the long-term interest rate is 6.8%? (Round your answer to 2 decimal places.) Perpetuity value £ b. What is the value of 3.30% perpetuities? (Round your answer to 2 decimal places.) Perpetuity value £
Why the answer is B? n investment offers to pay $ 100 a year forever starting at the end of ear 6 If the interest rate is 8%, what is the investment's value today? Yeur6 A. $787.71 B, $850.73 C. $1,250 D. $1,586.87 It will be worth 100/0.08 S1,250 at the end of year 5, and therefore worth $1,250/1.0865 $850.73 today. 1 00 008(H 1250
You have agreed to loan the owner of a library $5000 for 5 years at a simple interest rate of 8% per year. 1. How much interest will you receive from the loan? 2. How much will the library owner pay you at the end of 5 years? You have agreed to loan the owner of a library $5000 for 5 years at a simple interest rate of 8% per year. 1. How much interest will you receive from the...
how much would you have to pay for a 6 year bond earning 4.5% simple intere Example 2: How much would you have to pay for a 6-year bond earning 4.5% simple interest whose future value is $1000? Example 3: A 5-year bond costs $1000 and will pay a total of $250 simple interest over its lifetime. What is its annual interest rate?
You will receive 100 British bonds that pay interest forever. The amount of annual interest payments that you we ece ve is S5.000. If you could invest yOur money at 4.25%, how much are these bonds worth today? O A $55,000 B. $197,250 C. $250,000 O D. $117.647 ? E. $64,480 are considering the purchase of XYZ Company's common stock which will pay a $1.00 per share dividend one year from the date of purchase. The divid end is expected...
a. A company promises to pay you, and your descendants, $400 per year forever. Your required rate of returm is 10 percent. What is the most you would pay for this perpetuity? PV-Payment/Interest rate b. Future Value: If you deposit $12,000 in the bank today, what will it be worth in 15 years at9 percent compound growth? What is the formula for this problem? c. Present Value: If you plan to receive $12,000 from the bank in 15 years, what...
8) The British government has consol bonds (perpetuities) outstanding that pay £100 per year forever. Assume that the current discount rate is 4% a) What is the value of the bond today in £? b) If this consol trades in the market today at £2,480, what rate of return will an investor earn from this investment? 9) The Elysian Trust has set up a program that provides free school education for underprivileged children in India and Nepal. The Elysian...
2. How much interest is earned in an account by the end of 8 years if $24,000 is deposited at the beginning of year 1 and interest is 4.4% per year, compounded semi-annually? 3. If you wish to accumulate $53,000 in 7 years, how much must you deposit today in an account that pays annual interest rate of 8%, with quarterly compounding of interest? 4. If you deposit $9,000 at the end of each year for 9...