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1 . Use the following equation to find the future value of a $ 3 0 , 0 0 0 investment into a 2 0

1. Use the following equation to find the future value of a $30,000 investment into a 20 year treasury at 2.64%? Assume this investment only compounds at a rate of once per year. Also assume we are given the nominal rate of interest.
FV=PV(1+r)n
2. Lets assume the rate of inflation is represented by the target average of roughly 2.5%.Using the same inputs, what is the real return of our 20 year treasury? Show all your work.
3. We now want to pursue a more short term investment with more liquidity. Currently, the yield on 2-year US treasuries is 2.51%. Our 2-year treasury will yield a coupon payment every 6-months. Given the expanded version of our FV equation, what is the future value of this investment if all coupon payments were re-invested into principal until maturity? Note: we are only finding nominal returns here.
FV=PV(1+rt)(n)(t)
4. We would now like to know the present value of our 10-year treasury from question one. Use your result from question 1 for FV, this time we'll assume a typical compounding period for bonds of every 6 months (remember we are discounting). Use the present value form of our equation presented below:
PV=FV(1+rt)(n)(t)

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