In March 2012, Daniela Motor Financing (DMF), offered some securities for sale to the public. Under the
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(a) Assuming that you purchased the bond for $250, what rate of return would you earn if you held the bond for 35 years until it matured with a value $500? (Round your answer as directed, but do not use rounded numbers in intermediate calculations. Enter your answer as a percent rounded to 2 decimal places (e.g., 32.16).)
(b) Suppose under the terms of the bond you could redeem the bond in 2022. DMF agreed to pay an annual interest rate of .9 percent until that date. How much would the bond be worth at that time? (Round your answer as directed, but do not use rounded numbers in intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16)
(c) In 2022, instead of cashing in the bond for its then current value, you decide to hold the bond until it matures in 2047. What annual rate of return will you earn over the last 25 years? (Enter rounded answer as directed, but do not use rounded numbers in intermediate calculations. Enter your answer as a percent rounded to 2 decimal places (e.g., 32.16).)
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Corporate Finance Core Principles And Applications
ISBN: 9781260571127
6th Edition
Authors: Stephen Ross, Randolph Westerfield, Jeffrey Jaffe, Bradford Jordan
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