A bank offers you a certificate the yields $600 per year, starting at the end of...
A bank offers you a certificate the yields $600 per year, starting at the end of 1999 and up to the end of 2018 (n=20 years), plus one single payment of $10,000 at the end of 2018. Assuming that you wish to earn 10% interest on your investment, how much are you willing to pay for this certificate at the end of 1998?
Homework Answers
how much are you willing to pay for this certificate at the end of 1998
=PMT*((1-(1+r)^(-n))/r)+CF/(1+r)^n
=600*((1-(1+10%)^(-20))/10%)+10000/(1+10%)^20
=6594.57
the above is answer..
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