The process of when a product is recycled back into almost the same product, is called?
1 answer:
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For this case we have an equation of the form:
Where,
A: initial amount
b: growth rate
x: number of years
Substituting values we have:
By the time the earnings increase to 75000 we have:
From here, we clear x:
Answer:
you will have to wait until 23.95 years your winnings are worth $ 75,000
Where,
A: initial amount
b: growth rate
x: number of years
Substituting values we have:
By the time the earnings increase to 75000 we have:
From here, we clear x:
Answer:
you will have to wait until 23.95 years your winnings are worth $ 75,000
Answer:
(a) 9.9%
(b) 10.09%
The further explanation is given below.
Explanation:
The given values are:
Coupon payment
= $99
Price
= $1,000
(a)
The Yield to maturity (YTM) will be:
=
where,
C = Coupon payment
P = Price
n = years to maturity
F = Face value
On putting the estimated values is the above formula, we get
⇒
⇒
⇒ %
(b)
Although the 1st year coupon was indeed reinvested outside an interest rate of r%, cumulative money raised will indeed be made at the end of 2nd year.
=
Came to the realization compound YTM is therefore a function of r, as is shown throughout the table below:
Rate (r) Total proceeds Realized YTM ()
7.9% 1205.8 9.8%
9.9% 1207.8 9.9%
11.9% 1209.8 9.99%
Now,
Overall proceeds realized YTM:
=
=
=
=
=
=
= %