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3 years ago

If you invest $750 every six months at 8 percent compounded semi-annually, how much would you accumulate at the end of 10 years?

Business

1 answer:

liq [111]3 years ago

6 0

Answer:

FV= $22,333.56

Explanation:

Giving the following information:

Semi-annual investment= $750

Interest rate= 0.08/2= 0.04

Number of periods= 10*2= 20

<u>To calculate the future value, we need to use the following formula:</u>

FV= {A*[(1+i)^n-1]}/i

A= semi-annual deposit

FV= {750*[(1.04^20) - 1]} / 0.04

FV= $22,333.56

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2 years ago

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Answer: Option C

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3 years ago

A fee paid by a borrower to the lender for the use of borrowed money

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3 years ago

A two-year bond with par value $1,000 making annual coupon payments of $99 is priced at $1,000.

iVinArrow [24]

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:

= $\frac{C+\frac{F-P}{n} }{\frac{F+P}{2} }$

where,

C = Coupon payment

P = Price

n = years to maturity

F = Face value

On putting the estimated values is the above formula, we get

⇒ $99+\frac{0}{1000}$

⇒ $.099$

⇒ $9.9$ %

(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.

= $[99\times (1 + r)] + 1,099$