C
Christine K
Guest
Hello, can someone check my answers please. I am not sure if I did it right but is you can see if my answer is right that would help me out a lot. Thanks.
q. which is the better deal ? investing $5000 in a 10 year bond that pays 7% compounded semiannually, or investing $5000 in a 10year bond that pays 6% compounded monthly? prove your answers by showing the two different amount at the end of 10 years.
answer. at 7%
re ( 1 + .07/2)^2 -1 = 071225 = 7.1255%
5000 ( 1 + .071255% / 2 ) ^(10(2)) = $ 10067.4
answer at 6 %
re = ( 1+ .06 / 12 )^12 - 1 = .061678 = 6.1678 %
5000 ( 1 + .061678 / 12 ) ^ (10(12)) = $ 9250.14
Q. Karl wants to retire in 30 tears with $1000000. What does he need to invest now at 5.75 % compunded quaterly ?
Answer:
P = 1000000 ( 1 + .0575 / 4 ) ^ - (4 (30)) = $ 180375
Karl needs 180375 now to start.
q. which is the better deal ? investing $5000 in a 10 year bond that pays 7% compounded semiannually, or investing $5000 in a 10year bond that pays 6% compounded monthly? prove your answers by showing the two different amount at the end of 10 years.
answer. at 7%
re ( 1 + .07/2)^2 -1 = 071225 = 7.1255%
5000 ( 1 + .071255% / 2 ) ^(10(2)) = $ 10067.4
answer at 6 %
re = ( 1+ .06 / 12 )^12 - 1 = .061678 = 6.1678 %
5000 ( 1 + .061678 / 12 ) ^ (10(12)) = $ 9250.14
Q. Karl wants to retire in 30 tears with $1000000. What does he need to invest now at 5.75 % compunded quaterly ?
Answer:
P = 1000000 ( 1 + .0575 / 4 ) ^ - (4 (30)) = $ 180375
Karl needs 180375 now to start.