Suppose that someone owns a 30 year $14,000 T-bond with a rate of 6%. After five years the bond is sold for cash, but the interest rates have risen to 8.5%. (a)How much has the bond paid in total for the first five years? (b)How much will the bond pay the person buying it over the next 25 years? (c)How much is the bond currently worth?

Suppose that someone owns a 30 year $14,000 T-bond with a rate of 6%. After five years the bond is sold for cash, but the interest rates have risen to 8.5%. (a)How much has the bond paid in total for the first five years? (b)How much will the bond pay the person buying it over the next 25 years? (c)How much is the bond currently worth?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter5: The Time Value Of Money

Section: Chapter Questions

Problem 18P

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