Question 1: A) Assume that you will deposit $4000 at the end of each of the next...

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Finance

Question 1:

A) Assume that you will deposit $4000 at the endof each of the next three years in a St. George bank account paying8% interest. You currently have $7000 in the account. How much willyou have in three years? In four years?

B) You are looking into an investment that willpay you $12,000 per year for the next 10 years. If you require a15% return, what is the most you would pay for thisinvestment?

C) A bond has an 8% coupon, paid semi-annually.The face value is $100, and the bond matures in 6 years. If thebond currently sells for $91.137, what is the yield to maturity?What is the effective annual yield?

I need proper calculation with justification whereasrequired.

Answer & Explanation Solved by verified expert

4.3 Ratings (637 Votes)

AInformation provided Present value 7000 Yearly deposit 4000 Interest year 8 Time 3 years The question is solved in two parts First the value of the 7000 after 3 years needs to be computed Enter the below in a financial calculator to compute the future value PV 7000 N 3 IY 8 Press the CPT key and FV to compute the future value The value obtained is 881798 The value of the 7000 after 3 years is 881798 Next the value of the yearly deposit of 4000 needs to be computed Enter the below in a financial See Answer

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