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A couple is planning to finance its three-year-old son's university education. Money can be deposited...

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Finance

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A couple is planning to finance its three-year-old son's university education. Money can be deposited at 7% compounded quarterly. What quarterly deposit must be made from the son's 3rd birthday to his 18th birthday to provide $9000 on each birthday from the 18th to the 21st? (Note that the first deposit is made three months after the 3rd birthday and the last deposit is made on the date of the first withdrawal.) Answer: Suppose Ford sold an issue of bonds with a 14-year maturity, a $1400 par value, a 10% coupon rate, and semiannual interest payments. Please use the factor formulae to solve the questions below: (a) Two years after the bonds were issued after the 4thcoupon amount payments), the going rate of interest on bonds such as these fell to 7%. At what price would the bonds sell? Sell price = $ 1737.23 (keep 2 decimal places) (b) Suppose that, two years after the bonds' issue (after the 4thcoupon amount payments), the going interest rate had risen to 14%. At what price would the bonds sell? Sell price = $ 1078.86 (keep 2 decimal places)

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