Question
Please show the specific details of the calculation Qestion1: This morning, your grandmother bought you an annuity trust that will provide annual payments for 20
Please show the specific details of the calculation
Qestion1: This morning, your grandmother bought you an annuity trust that will provide annual payments for 20 years. Based on the contract, you will receive the first payment 5 years from now in the amount of $3,000. Every year after that, the payment amount will increase by 4%. Suppose the annuity trust can generate a annual return of 8%. How much do your grandmother pay for this annuity trust?
Question2: The 15-year corporate bond issued by Wells Delivery Corp. has a face value of $1,000, a coupon rate of 6% (paid semiannually). What is the percentage change in the bond price if the market yield to maturity rise to 5.7 percent from the current rate of 5.5 percent? [Hint: calculate bond prices with 5.5 percent and 5.7 percent, then compute the percentage change in two prices.]
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