Question
1. ABC Corporation has decided to sell 1000 bonds which will pay semiannual dividends of 20 (2% per period) and will mature in 5 years.
1. ABC Corporation has decided to sell 1000 bonds which will pay semiannual
dividends of 20 (2% per period) and will mature in 5 years. The bonds are sold at
830, but after brokers' fees and other expenses the company ends up receiving 760.What is the company's cost of the capital raised through the sale of these bonds?
2. ABC Corporation has decided to sell 1000 bonds which will pay semiannual
dividends of 20 (2% per period) and will mature in 5 years. The bonds are sold at
830, but after brokers' fees and other expenses the company ends up receiving 760.Is the bond a good buy for an investor who expects a 9% return on his investments?
3. A student deposits 1,000 in a savings account that pays interest at the rate of 6%
per year compounded annually. If all the money is allowed to accumulate, how much
money will the student have after 12 years?
4. A certain sum of money will be deposited in a savings account that pays interest at
the rate of 6% per year compounded annually. If all the money is allowed to accumulate,how much must be deposited initially so that 5000 will have accumulated after 10years?
5. A student plans to deposit 600 each year in a savings account, over a period of 10years. If the bank pays 6% per year compounded annually, how much money will haveaccumulated at the end of the 10-year period?
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