Question
Hi expert tutors . I'm having trouble in this question i could not solve this . Can tutor help me to explain and solve this
Hi expert tutors . I'm having trouble in this question i could not solve this . Can tutor help me to explain and solve this question please . Subject ; financial management
Question 1
(a) Judith would like to send her parents on a cruise for their 30th wedding anniversary five years from today. The price of the cruise is expected to be $30,000 and she has 5 years to accumulate this money. How much must Judith deposit annually in an account paying 10 percent interest in order to have enough money to send her parents on the cruise? (5 marks)
(b) Recently Mr. John has allocated RM 30,000 for the investment purpose. He needs advice on his investment options: Option A: Invest in a fund that pays 10% compounded annually for six years. Option B: Invest in a fund that pays 11% compounded quarterly for six years. Option C: Invest in a fund that pays 8% compounded semi-annually for six years. Option D: Invest in a fund that pays 7% compounded daily for six years. You are required to calculate the accumulated sum from each option and advice Mr. John on the best option available. (10 marks)
(c) HARTALEGA Corporation issued RM1,000 bonds that pay 5% interest annually and have 16 years until maturity. Investor can purchase the bond for market price of RM825. What is the yield to maturity on this bond? (5 marks)
(d) James owns a bond that pays a 5% coupon rate with a RM 1000 par value. It matures in 10 years. The market's required yield to maturity on a comparable risk bond is 8%. Calculate the value of the bond. (5 marks)
(Total: 25 marks)
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