Albert Einstein reportedly said, "Compound interest is the eighth wonder of the world. He who understands it, earns it. He who doesn't, pays it." Regardless of whether Einstein uttered these exact words, the essence of his statement is still immensely powerful and cannot be disputed. For anyone who wants to build lasting wealth, understanding and harnessing the power of compound interest is essential. For the more visual of you, imagine, if you will, building the bottom part of a snowman. It starts with a snowball (or initial investment). You roll it around in the snow and it slowly gets bigger (interest on the investment). A slow and monotonous process until something wonderful becomes apparent - the snowball not only gets bigger and bigger, but at a faster and faster rate (interest on the interest).Your friend, Mike Szyslak wants be a millionaire, and he found several ways applicable. But he is still hesitating among the various options and comes to you for financial advice. Complete each of the options, below, with your group

• Option 5: Mike considers to buy 1,000 bonds. The bond is semi-annual coupon bond with 10-year maturity, the par value is $1,000 per bond with a 10% annual coupon rate. How much does it cost now ifthe annual yield to maturity is 10%?What would be the value of the bond if, just after it had been issued, the expected inflation rate rose by 2%? What would be the bond's value if inflation fell, and required rate of return declined to 8 percent?
• Option 6: Mike would like to know how much money he should invest annually in order to have $1,000,000 in 15 years.He assumes that he can earn 10% interest per year and the investment was made at the beginning of each year. What if the interest rate is compounded continuously?
• Option 7: If Mike is a millionaire today, how long will it take for his money to double if it is desired interest rate is 12% per year compounded semi-annually?