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QUESTION 8 10 points Save Answer Suppose that you buy a bond that pays $96.79 in coupon payments for 23 months with a maturity bonus
QUESTION 8 10 points Save Answer Suppose that you buy a bond that pays $96.79 in coupon payments for 23 months with a maturity bonus of $545.43. How much money will this bond pay out over its lifetime? Round your answer to two (2) decimal places QUESTION 9 10 points Save Answer You have just become the president of a company deciding whether to build a new factory (congrats!). The factory is expected to cost $482 million to build, and will yield benefits of $806 million in 9 years. The current annual interest rate is i=1%. What is the Present Value of the factory's benefits in millions of dollars? So if your answer is "35.56 million dollars", you should type in "35.56", NOT "35,650,000" Round your answer to two (2). decimal places QUESTION 10 10 points Save Answer Suppose the factory in the last question costs $960 million to build this year. Since the present (cost/benefit) is higher than the present (cost/benefit) It is[ (worthot worth) it to build the factory todayThe Financial System - The Real interest rate (R) can be found Nominal comes Real and _ . 1 . _ money money . . With Fisher 5 Equation (on the right) growth from '"f'atm" / / ' When inflation is small, we can use (1 +1) 2 (1 'l' R) * (1 + 7T) Fishers apprOXImation: R z t 1t => (1 + i) = 1 +7: + R + (R *1r) ' To get the real interest rate, just subtract => 1' z n + R out the inflation rate! _ => R z I. 1t Future Value - $100 right now gives you $103, while 51 per day gives you 5100.001 - Money today is worth more than money in the future - Money today can be put into savings and gain interest 100 (100-10/365 . , - 30 Future money doesn t gain as $1 20+ A) =$100.0011146 much interest Future Value - Suppose the current nominal interest rate is i = 3% - If we put $100 into the bank today, it will turn into $103 in one period $0 $100 today = 5103 next period 510/19 a 5100*(1 03) =$103 \"aw Today One period later (period- ",year\" "month\
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