Q#3
Mark Ventura has just purchased an annuity to begin payment two years from today. The annuity is for $17,000per year and is designed to last 10 years.
If the interest rate for this problem calculation is 12 percent, what is the most he should have paid for the annuity? UseAppendix BandAppendix Dfor an approximate answer, but calculate your final answer using the formulaandfinancial calculator methods.
Q#4
Essex Biochemical Co. has a $1,000 par value bond outstanding that pays 16 percent annual interest. The current yield to maturity on such bonds in the market is 11 percent. Use Appendix B and Appendix D for an approximate answer but calculate your final answer using the formula and financial calculator methods. Compute the price of the bonds for the maturity dates: (Do not round intermediate calculations. Round your final answer to 2 decimal places. Assume interest payments are annual.) Bond Price a. 40 years b. 20 years c. 1 years Appendix D Present value of an annuity of $1, PV IFA PVA = A (1 + i) Percent Period 1% 2% 3% 4% 5% 6% 7% 8% 9% 11% 12% 0.990 0.980 0.971 0.962 0.952 0.943 0.935 0.926 0.917 0.909 0.893 2 1.970 1.942 1.913 1.886 1.859 1.833 1.808 1.759 1.736 1.713 1.690 3 2.941 2.884 2.829 2.775 2.723 2.673 2.577 2.444 2.402 3.902 3.808 3.717 3.630 3.546 3.465 3.387 3.312 3.240 3.170 3. 102 3.037 5 4.853 4.713 4.580 4.452 4.329 4.212 3.993 3.890 3.791 3.696 3.605 6 5.795 5.601 5.417 5.242 5.076 4.917 4.767 4.623 4.355 4.231 4.111 6.728 6.472 6.230 6.002 5.786 5.582 5.389 5.206 4.868 4.712 4.564 8 7.652 7.325 6.733 6.463 6.210 5.971 5.747 5.535 5.335 5.146 4.968 9 8.566 8. 162 7.435 7.108 6.802 6.515 6.247 5.995 5.759 5.328 10 9.471 8.983 8.111 7.722 7.360 7.024 6.710 6.418 6. 145 5.650 11 10.368 9.787 9.253 8.306 7.887 7.499 7.139 6.805 6.495 5.938 12 11.255 10.575 9.954 9.385 8.384 7.943 7.536 7.161 6.814 6.492 6. 194 13 12. 134 11.348 9.986 9.394 8.358 7.904 7.103 6.424 14 13.004 12.106 11.296 10.563 9.899 9.295 8.745 8.244 7.786 7.367 6.982 6.628 15 13.865 12.849 11.938 11.1 18 10.380 9.712 8.559 8.061 7.606 7.191 6.811 16 14.718 13.578 12.561 11.652 10.838 10.106 9.447 8.851 8.313 7.824 7.379 6.974 17 15.562 14.292 13.166 11.274 10.477 9.763 9.122 8.544 8.022 7.549 7.120 18 16.398 14.992 13.754 12.659 1 1.690 10.828 10.059 9.372 8.756 8.201 7.702 7.250 19 17.226 15.678 14.324 13. 134 12.085 11. 158 10.336 9.604 8.950 8.365 7.839 7.366 20 18.046 16.351 14.877 13.590 12.462 11.470 10.594 9.818 9.129 8.514 7.963 7.469 25 22.023 19.523 17.413 15.622 12.783 11.654 10.675 9.823 9.077 8.422 7.843 30 25.808 22.396 19.600 17.292 15.372 13.765 12.409 11.258 10.274 9.427 8.694 8.055 40 32.835 27.355 23.115 19.793 17. 159 15.046 11.925 9.779 8.951 8.244 50 39. 196 31.424 25.730 21.482 18.256 15.762 13.801 12.233 10.962 9.915 9.042 8.304
