(10 pts) 11. (8 pts) 12. The Butler family is planning for their daughter's education. She...

 

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(10 pts) 11. (8 pts) 12. The Butler family is planning for their daughter's education. She is three years old and will start college in 15 years. How much will they have to set aside each year, beginning one year from today to have $800,000 when she starts college. The interest rate is 10 percent? How much will the daughter be able to withdraw from the account each of her five years in college? Twenty years ago, Amazon.com, Inc issued 30-year bonds that had a coupon rate of 8 percent with the interest paid semi-annually. If these bonds are now trading with a 10 percent market required yield, at what price are these bonds now selling? The par value of the bonds is $1,000. Why is the price now different from the par value? (10 pts) 11. (8 pts) 12. The Butler family is planning for their daughter's education. She is three years old and will start college in 15 years. How much will they have to set aside each year, beginning one year from today to have $800,000 when she starts college. The interest rate is 10 percent? How much will the daughter be able to withdraw from the account each of her five years in college? Twenty years ago, Amazon.com, Inc issued 30-year bonds that had a coupon rate of 8 percent with the interest paid semi-annually. If these bonds are now trading with a 10 percent market required yield, at what price are these bonds now selling? The par value of the bonds is $1,000. Why is the price now different from the par value?

Answer rating: 100% (QA)

For question 11 The daughter is 3 years old and will start college in 15 years The goal is to have 8... View the full answer