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You have inherited two bonds from your Great Aunt Agatha. One matures on June 30, 2020 and will pay $5,000; the other matures three years
You have inherited two bonds from your Great Aunt Agatha. One matures on June 30, 2020 and will pay $5,000; the other matures three years later and will pay $7,000. Assume that your investments will earn 4.0%, compounded continuously. a) What is the expected value of your inheritance when the second bond matures on June 30, 2023? b) What will be the present value of your inheritance on June 30, when you get the first payment? c) BONUS Your cousin Arthur offers to pay you $11,500 on June 30, 2020 for both bonds. How would you decide (if you had a calculator) whether to accept his offer
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