a. How much should you pay for a $10,000 bond (face value) with 8% coupon, annual payments, and 3 years to maturity if the interest rate is 14%? b. Your parents agree to pay half of the purchase price of a new car when you graduate from college. You will graduate and buy the car two years from now. You have $13,000 to invest today and can earn 6% on invested funds. If your parents match the amount of money you have in two years, what is the maximum you can spend on the new car? c. How much can be accumulated for retirement if $12,000 is deposited annually, beginning one year from today, and the account earns 9% interest compounded annually for 17 years?
a. How much should you pay for a $10,000 bond (face value) with 8% coupon, annual payments, and 3 years to maturity if the interest rate is 14%? b. Your parents agree to pay half of the purchase price of a new car when you graduate from college. You will graduate and buy the car two years from now. You have $13,000 to invest today and can earn 6% on invested funds. If your parents match the amount of money you have in two years, what is the maximum you can spend on the new car? c. How much can be accumulated for retirement if $12,000 is deposited annually, beginning one year from today, and the account earns 9% interest compounded annually for 17 years?
Chapter11: Capital Budgeting Decisions
Section: Chapter Questions
Problem 3PB: Use the tables in Appendix B to answer the following questions. A. If you would like to accumulate...
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2. Answer the followings 9 marks:
a. How much should you pay for a $10,000 bond (face value) with 8% coupon, annual payments, and 3 years to maturity if the interest rate is 14%?
b. Your parents agree to pay half of the purchase price of a new car when you graduate from college. You will graduate and buy the car two years from now. You have $13,000 to invest today and can earn 6% on invested funds. If your parents match the amount of money you have in two years, what is the maximum you can spend on the new car?
c. How much can be accumulated for retirement if $12,000 is deposited annually, beginning one year from today, and the account earns 9% interest compounded annually for 17 years?
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