Question
please show me calculation/workings try to solve as many as possible please 5. Your friend is considering investing $5,000 at the end of every quarter
please show me calculation/workings
try to solve as many as possible please
5. Your friend is considering investing $5,000 at the end of every quarter in a bank account
paying 8% per annum. The first contribution will be made at the end of the first quarter. If
interest is compounded monthly, the total amount she will have accumulated at the end of ten
years is closest to:
a) $228,338.
b) $289,731.
c) $302,010.
d) $302,886.
7. You are thinking about buying a rare collectible that costs $50,000. The dealer is proposing
the following deal. She will lend you the money and you will repay the loan by making the
same payment every two years for the next 20 years. If the interest rate is 4% p.a.
compounded annually, the amount you will have to pay every two years is closest to:
a) $3,679.
b) $5,153.
c) $6,165.
d) $7,505.
8. BLB Ltd has just issued a coupon growth bond with the following terms. Each bonds face
value is $1,000 and the bonds will mature in 5 years time. Coupons will be paid on an annual
basis at the end of each year. The first years coupon will be $100 which will then grow at an
annual rate of 10% until the bonds mature. If the bonds yield to maturity is 8% per annum, its
price today should be closest to:
a) $972.
b) $1,080.
c) $1,161.
d) $1,275.
9. Consider a five-year bond with a face value of $1,000 paying annual coupons at a rate of 12%
which has a current yield to maturity of 10%. If all interest rates remain unchanged, one year
from today the price of this bond:
a) Will be higher.
b) Will be lower.
c) Will be the same.
d) Cannot be determined without additional information.
10. Your favorite aunty has finally agreed to contribute towards funding your retirement.
Specifically, she will start with a contribution of $6,000 today (that is, end of year 0) but this
amount will then decline at a constant rate of 3% p.a. over the foreseeable future. If the
interest rate appropriate for valuing your auntys contribution is 12% p.a. its present value
today is closest to:
a) $38,800.
b) $44,800.
c) $56,000.
d) $70,667.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started