A corporation issued a $100,000 bond with semi-annual coupons payable at j2 = 9%/year and redeemable at par on April 10, 2028. An investor buys this bond for $98,500 on April 10, 2018.

(a) The investor deposits each coupon into a money market mutual fund. The fund guarantees a nominal interest rate of 6%/year compounded quarterly. However, each quarter, just after interest is credited to the account, the fund charges management expenses of 0.25% on the account balance. How much money will be in the money market mutual fund account on October 10, 2024? Note: If you cannot solve part (a) entirely, assume that the answer is $75,000.

(b) If the investor sells the bond on October 10, 2024 to a third party who requires a rate of return of j2 = 8%/year, how much will the investor fetch for the bond?

(c) What will be the effective annual rate of return the investor earned on his/her investment? No excel answers please.