Question
1. To save for her newborn son's college education, Lea Wilson will invest $1,000 at the end of each year for the next 18 years.
1. To save for her newborn son's college education, Lea Wilson will invest $1,000 at the end of each year for the next 18 years. The interest rate is 12 percent. What will be the value of her investment at the end of the 18 years?
2. Sharon Smith will receive $1 million in 30 years. As an alternative, she can receive $90,000 today. If we use a discount rate of 8%, which should she choose?
3. Yesterday Google issued 20 Year bonds with a 5% Interest Rate/Coupon when the required rate of return or yield to maturity was 5%. Today, investors are requiring an 8% return or yield to maturity. What will be the new market price of the bond?
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