You want to be able to withdraw $35,000 each year for 15 years. Your account earns 9% interest. a) How much do you need in your
1 answer:
Your interests are activities that you enjoy doing and subjects that you enjoy spending time learning. Are interest. When something interesting, it draws your attention and makes you want to learn more about it: less interesting was discussed.
Interest is the money paid to spend someone else's money. An interesting example is $ 20 in this year's savings account. An example of interest is the $ 2,000 paid on a mortgage this year.
Interest is paid for a lifetime but disappears upon death (especially from the property).
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Answer:
The bond's yield to maturity is 9.45% using Excel to get exact values, and 9.59% using approximate method.
Explanation:
We can calculate is using 2 ways, using Excel to get the exact percentage or with approximate methods, calculating the semi-annual Yield to Maturity using the following formula
And from there we can calculate the Yield to Maturity just by multiplying the semi-annual one by 2.
Identifying the given information.
We have a period of 30 years, so for the semiannual bond we have periods.
The face value, FV, is $1000, the coupon rate is 0.10, thus we can use them to find the interest per period PMT.
The current price of the bond, PV is $1050.
Replacing the values on the semiannual Yield to Maturity
Simplifying we get
Finding the Yield to Maturity.
We can just multiply by 2 to get the Yield to Maturity from our previous result and rounding it to 2 decimals we get
Alternatively we can use Excel and write:
RATE(n, PMT, PV, FV)*2
That is
RATE(60,50,1050,1000)*2
And we will get the exact Yield to maturity 9.49%