You have decided to buy a perpetual bond. The bond makes one payment at the end of every year forever and has an interest rate of 10%. If the bond initially costs $4,000, what is the payment every year? The payment at the end of each year is $ (Round to the nearest dollar.)
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- You want to invest $8,000 at an annual Interest rate of 8% that compounds annually for 12 years. Which table will help you determine the value of your account at the end of 12 years? A. future value of one dollar ($1) B. present value of one dollar ($1) C. future value of an ordinary annuity D. present value of an ordinary annuityYou have decided to buy a perpetual bond. The bond makes one payment at the end of every year forever and has an interest rate of 5%. If the bond initially costs $3,000, what is the payment every year? The payment at the end of each year is $ (Round to the nearest dollar.)You have decided to buy a perpetual bond. The bond makes one payment at the end of every year forever and has an interest rate of 7%. If the bond initially costs $5000, what is the payment every year?
- You are thinking about buying a savings bond. The bond costs $130 today and will mature in 10 years with a value of $260. What annual interest rate will the bond earn? The bond will earn 0.25%. (Round to two decimal places.) CYou are thinking about buying a savings bond. The bond costs $42 today and will mature in 13 years with a value of $84. What annual interest rate will the bond earn? The bond will earn an annual rate of %. (Round to two decimal places.)You are thinking about buying a savings bond. The bond costs $70 today and will mature in 10 years with a value of $155. What annual interest rate will the bond earn? The bond will earn (Round to two decimal places.)
- You wish to purchase a $1,000 bond from a friend who needs the money. There are 7 years remaining until the bond matures, and interest payments are quarterly. You decide to offer $750.08 for the bond because you want to earn exactly 16% per year compounded quarterly on the investment. What is the annual bond rate of interest?If you are considering the purchase of a bond that pays $850 per year forever, and the rate of interest you want to earn is 11% per year, how much money should you pay for the bond?Suppose that if you purchase a US Treasury bond, it will pay you a one-time payment of $5000 in 10 years from now. What interest rate would you earn if you bought this bond for $3000?
- Suppose you are given a choice of the following two securities: (a) an annuity that pays $10,000 at the end of each of the next six years; or (b) a perpetuity that pays $10,000 forever, but the first cash payment is 11 years from today. Which security do you choose if the annual interest rate is 5%? Does your answer change if the interest rate is 10%? Explain why or why not.Suppose that savings and other investments will pay you 4% interest. A bond promises to pay you and your descendants $200 every year forever, starting next year. What is the most you would be willing to pay for this bond now?You are considering a savings bond that will pay $100 in 10 years. If the interest rate is 2%, what should you pay today for the bond?