You are a young urban professional in your late 20’s and want to save up for your wedding and other life milestones. You decide to invest one million USD at the start of the year in a financial instrument that gives 10,000 every June 30 and an undisclosed amount every December 31. The amount to be given is undisclosed because it will depend on the performance of the financial instrument in the market. You intend not to withdraw this investment until you die. Assuming an MARR of 9% per semi-annual, compounded semi-annually, compute for the minimum acceptable value X to be paid every December 31.

The question is based on the concept of interest calculation on investment based on Minimum Accepted…

Answered: You are a young urban professional in…

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter19: Capital Investment

Section: Chapter Questions

Problem 8E

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You are a young urban professional in your late 20’s and want to save up for your wedding and other life milestones. You decide to invest one million USD at the start of the year in a financial instrument that gives 10,000 every June 30 and an undisclosed amount every December 31. The amount to be given is undisclosed because it will depend on the performance of the financial instrument in the market. You intend not to withdraw this investment until you die.

Assuming an MARR of 9% per semi-annual, compounded semi-annually, compute for the minimum acceptable value X to be paid every December 31.

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