Question
The British government has a consol bond outstanding paying 400 per year forever. Assume the current interest rate is 4% per year. a. What is
The British government has a consol bond outstanding paying 400 per year forever. Assume the current interest rate is 4% per year.
a. What is the value of the bond immediately after payment is made?
The value of the bond immediately after payment is made is _______
b. What is the value of the bond immediately before a payment is made?
The value of the bond immediately before a payment is made is ________
When you purchased your car, you took out a five-year annual-payment loan with an interest rate of 5.5% per year. The annual payment on the car is $5,400. You have just made a payment and have now decided to pay off the loan by repaying the outstanding balance. What is the payoff amount for the following scenarios?
a. You have owned the car for one year (so there are four years left on the loan)?
The payoff if you have owned the car for one year (so there are four years left on the loan) is $________
b. You have owned the car for four years (so there is one year left on the loan)?
The payoff if you have owned the car for four years (so there is one year left on the loan) is $___________
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