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3 years ago

You will be paying $10,300 a year in tuition expenses at the end of the next two years. Bonds currently yield 8%.

Business

1 answer:

Ahat [919]3 years ago

5 0

Present value of obligation is: 10,300(Cumulative PVF at 8% for two years)=10,300*1.783=$18,367.63

Duration of obligation is 1.4808 years.

The duration of a zero-coupon bond is 1.4808 years would immunize the obligation. $18,367.63(1.08)1.4808=$20,584.82.

If interest obligation increases to 9%, the value of the bond would be $18,118.65 and it changed by $0.19, the same is for if it falls to seven percent.

Hope this helps, now you know the answer and how to do it. HAVE A BLESSED AND WONDERFUL DAY! As well as a great rest of Black History Month! :-)

- Cutiepatutie ☺❀❤

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3 years ago

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Mashcka [7]

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2 years ago

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belka [17]

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3 years ago

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Paha777 [63]

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The options to this question wasn't provided. The full question can be found here: https://www.chegg.com/homework-help/relationship-quantity-supplied-price-relationship-quantity-d-chapter-3-problem-7mcq-solution-9780077416355-exc

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3 years ago

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Read more on culture here:brainly.com/question/514395

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2 years ago